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Streaming Killed The Cable Bundle: Record 941,000 Pay-TV Customers Ditch Cable In Q2

Courtesy of Zero Hedge

Back in the ancient days, long before Al Gore had even invented the internet, the Buggles declared once and for all that "Video Killed the Radio Star."  Now it seems that a remake of that classic MTV hit is in order as, with each passing quarter, it's becoming increasingly clear that streaming has officially killed the cable bundle.  

We've long held the opinion that the content creation and media distribution businesses are on the precipice of a major transformation.  Since the birth of cable TV, content creators (think Disney, Discovery, Scripps, AMC, etc.) have been locked in a perpetual tug-of-war with distribution companies (Comcast, Charter, Verizon, AT&T, etc.).  Up until now, content creators have been the clear winners as they've continued to force cable companies to carry their growing lineup of channels, many of which are awful, by effectively holding their good content hostage until distributors agree to pay for channels that they (and their customers) likely don't want.  As an example, a company like Scripps may refuse to sign a distribution agreement with Charter for HGTV or the Food Network, unless they also agree to pay for their less popular channels like TVN, Fine Living or the Asian Food Channel.

All of which is precisely why cable customers have ended up paying for 1,000 channels when they really only watch about 5 of them.

But, that is all changing with the onset of direct-to-customer streaming.  HBO was the first to blink, then came ShowTime and now Disney has just announced that ESPN will also go direct.  What this means, of course, is that increasingly people will be able to make a la carte purchases of the media they actually value and ditch all the 'crap' that clever content creators have forced down our throats for years by holding their desired content hostage. 

In summary, streaming killed the cable bundle.

All of which is precisely why, as Fast Company and MoffettNathanson report, pay-TV customers are ditching cable bundles in record numbers with nearly 1 million customers throwing in the towel in Q2 2017 alone.

The country’s top cable and satellite TV providers just wrapped up another quarter of record subscriber declines as customers flee traditional pay-television distributors in favor of streaming and on-demand services, according to a research note from MoffettNathanson. Combined declines for the second quarter of 2017 came close to a million subscribers, the firm estimates, with Dish Network, DirectTV, and AT&T hit especially hard. As bad as it was, the customer exodus was not as bad as some analysts had predicted, prompting analyst Craig Moffett to ask the question, “Is ‘not as worse’ even a thing?”

“[Y]es, things are getting worse,” Moffett wrote. “But at least in Q2 they got worse more slowly. Less worse. Or, not as worse. Or, well, you get the idea.”

If all this sounds familiar, it’s because three months ago, the industry had just logged its worst quarter in history, losing an estimated 762,000 pay-TV subscribers. This time around, that number has jumped to 941,000 subscribers. Even Comcast, which had been bucking the trend over the last few quarters, ended Q2 with a net loss of 34,000 pay-TV customers.

Of course, if you're going to stream all of your media content online then you need a good internet connection which is at least partially why the satellite and DSL providers (Dish, DTV, AT&T) are bleeding customers way faster than the cable companies that deliver much faster internet speeds.

Perhaps it's time for a remake?


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