Q1 2021 Cord-Cutting Review: VMVPD Lifeboats Have Sprung a Leak
It’s a given that the reported number of MVPD subscribers in the first quarter of 2021 will be lower than the previous quarter’s figure, with a drop of -1.4 million subs (-2.2%) marking the 20th straight quarter of decline since Q1 2016.
Q1 2021 saw 65.3 million pay-TV subscribers across the major companies reporting to investors: Altice USA, AT&T, Charter, Comcast, Dish and Verizon. This is a year-over-year decline of -7.2% versus Q1 2021, or -5.1 million customers.
What was different in Q1 was that VMVPD numbers were also down when comparing with the previous quarter, with VIP+ estimates pegging the total number of subscribers at 11.6 million, a decline of -0.8%. This was led by Disney’s Hulu with Live TV service declining for the second straight quarter (by -5%, to 3.8 million).
Company execs didn’t speculate on why during the Q1 investor call, but the ill-advised $10 monthly service increase in December 2020 likely has a part to play. How Disney must be regretting adding 14 expensive ViacomCBS networks in January, with a future monthly service increase on the horizon.
In fairness to VMVPDs, this happened in Q1 2020, too, after tremendous gains in the prior Q3. This is likely a bump caused by NFL fans coming in when the season starts and leaving after the Super Bowl. Even so, given how company execs like to trumpet when their subscriptions rise without context behind it, it’s appropriate to point out when it falls and that there is seasonal churn for VMVPDs.
Year-over-year, VMVPDs are up by 2.2 million subscribers. Quarterly growth has been slowing down, NFL-driven Q3s aside, with it likely that Hulu and Sling aren't the only services to see growth grind down. YouTube TV reports subscriber figures on an erratic basis, likely only when there is a nice increase to share.
This leads to the recognition that the days of big growth for VMVPDs are over. AT&T TV Now is already closed to new subscribers. Together with Hulu, FuboTV and YouTube TV, these are all options costing a minimum of $64.99 a month. Throw in the cost of broadband Internet, and the package costs the same as most cable and Internet bundles, only with a substantially lower network count. Where’s the value?
Perhaps expensive VMVPDs do offer a true alternative for those willing to not pay for Wi-Fi and only use their cellular device, but this is a small slice of the market. VMVPDs began as a true alternative to the bloated cable model, offering a much smaller bundle of channels for a radically lower price. Only Sling TV and Philo have stayed true to this ethos.
The divorce from reality that PS Vue (defunct), AT&T TV Now (almost defunct), Hulu with Live TV and YouTube TV are showing suggests what was once viewed as the lifeboat for TV networks, the way to keep cord-cutters within the live TV ecosystem, has sprung a leak.
This is further evidenced by the dash to free streaming on which ViacomCBS (Pluto TV), Fox (Tubi), Comcast (Xumo and Peacock), A&E Networks (FAST channels) and AMC Networks (FAST channels) have embarked. Unless the bloated VMVPDs demonstrate sweeping change to their channel lineup, such as a tiered system à la Dish’s Sling TV, growth will continue to stall and more consumers will completely exit the linear TV market.
