- AT&T’s DirecTV Now lost 83,000 net subscribers during the first quarter of 2019. Dish Network’s Sling TV gained just 7,000.
- Overall, BTIG Research analyst Rich Greenfield said it was one of the worst quarters ever for pay-TV subscriber losses in the US.
- Price hikes, package changes, and more competition lead to the weak quarter, the companies said.
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Legacy pay-TV’s big bet on internet bundles is losing momentum.
AT&T and Dish Network’s online pay-TV services each posted poor subscriber growth during the first quarter of 2019.
DirecTV Now, AT&T’s streaming-TV service, lost 83,000 net subscribers during the period, AT&T said when it reported earnings on April 26 — after losing 267,000 during the fourth quarter of 2018, and gaining 312,000 during the first quarter of that year. It closed the period with about 1.5 million subscribers, flat versus a year ago. (AT&T did not report subscriber figures for its low-cost bundle, Watch TV, which costs $15 per month compared to the $50 DirecTV Now starts at.)
The quarter was a little rosier for Dish’s Sling TV, but not by much.
Sling TV ended the period with 2.4 million subscribers, about 121,000 more than it had this time a year ago, it said in its quarterly report on May 3. It gained just 7,000 net subscribers, down from 91,000 during the same quarter in 2018.
The quarter was one of the worst ever for cord-cutting in the US, Rich Greenfield, a media analyst at BTIG Research, who has been bearish on pay-TV bundles, wrote in a blog post on Friday.
Traditional pay-TV companies like DirecTV and Dish bet on streaming-TV bundles to offset the subscribers they were losing in their satellite and other pay-TV businesses. But now, Greenfield found, the virtual bundles are failing to cover the losses.
In the first quarter of 2019, overall net losses among US pay-TV services, including the internet bundles, totaled 1.02 million, compared to a net gain of 245,000 this time last year. The virtual-TV services added just 174,000 subscribers compared to 933,000 in the first quarter of 2018.
Greenfield tracked most of the major traditional pay-TV services in the US, including Charter, Comcast, DirecTV, Dish, Verizon, and others, as well as the streaming-TV services DirecTV Now, FuboTV, Hulu Plus Live TV, Philo, Sling TV, Sony’s PlayStation Vue, and YouTube TV.
The weak quarter comes as many internet bundles have raised prices to keep up with rising costs of programming.
DirecTV Now, Hulu Plus Live TV, and FuboTV raised prices in recent months. Philo, one of the lowest-cost bundles, scrapped its $16 bundle in May and is now only offering its $20 package. And, last summer, PlayStation Vue and Sling TV hiked the costs of some plans.
At DirecTV Now, the subscriber losses were linked to an overhaul that was announced in March of its bundles and channel lineups, which increased the cost of its packages by $10 per month. It was the service’s second price hike in under a year. AT&T expects a "decent" second half of the year for DirecTV Now, CEO Randall Stephenson said on its first quarter earnings call.
Dish blamed Sling TV’s sluggish growth on greater competition, including that from other streaming-TV services, and spats with AT&T and Univision that saw channels like HBO removed from the service in November.
Traditional pay-TV companies had looked to internet bundles as a way to stave off competition from streaming services like Netflix, by offering the flexibility to watch video anywhere without contracts and typically at lower price points than cable. For legacy networks like Disney and Comcast’s NBCUniversal, these bundles also helped preserve the carriage fees they received from pay-TV providers who distributed their channels.
As the online pay-TV bundles from traditional TV companies like AT&T and Dish waver, however, legacy media brand Viacom has gone another route.
The company bought for $340 million earlier this year a free streaming-TV service called Pluto TV, which earns its revenue from advertising, rather than a combination of advertising and subscription fees. Viacom has since launched 14 free channels for BET, Comedy Central, MTV, and other brands on Pluto TV. Viacom reports earnings on May 10.
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