Following the significant drop of the second quarter, U.S. multichannel subscriber losses slowed in the period ended Sept. 30, but that will do little to deflate fears over cord cutting.
In the first three quarters of 2015, the multichannel universe logged its largest-ever customer drop for the period, more than quadrupling the previous record, set in 2014. More ominously, SNL Kagan’s data highlights the industry's difficulties to keep up with housing formation.
That said, there appears upside from the second quarter and its 629,000 subscriber decline. Customer losses were cut by 41.2%, cable logged its best third-quarter results in 8 years and approximately half of the loss was isolated to DISH Network.
The period ended Sept. 30 was the industry’s sixth consecutive quarter in negative territory: period during which the United States gained 1.8 million occupied households. The converging trends have led to a slump in the U.S. multichannel penetration rate.
At the end of the third quarter, the number of occupied households not taking a multichannel subscription from cable, DBS or telco stood at more than 21 million, according to SNL Kagan estimates. This figure does not factor out households with multiple subscriptions.
Over-the-air households and/or non-multichannel broadband homes — defined as broadband Internet subscribers that do not take a legacy multichannel product — represent most of those 21 million households.
Highlights from SNL Kagan’s 3rd-quarter Multichannel Subscriber report:
- Year-to-date, cable operators have shed an estimated 672,000 basic subscriptions: a 39% reduction in customer losses annually. For the period under consideration, the first nine months of the year, it is also cable’s first sub-1 million drop since 2008.
- The direct-broadcast satellite (DBS) segment lost an estimated 152,000 subscribers in the third quarter, as DIRECTV’s return to positive net adds was overcome by mounting DISH losses.
- The top two telecommunications companies (telcos) combined to lose 49,000 video customers, in stark contrast to a gain of 330,000 the same period last year.