Cord Cutting Was Crazy in Q2, But Will It Continue?

This second quarter saw a lot of upward mobility for cord-cutting. From Netflix to Hulu and PlutoTV, we saw that many households continue migrating towards OTT streaming and cord-cutting versus traditional pay TV.

According to The Wrap, Comcast, AT&T and Charter combined to lose 1.25 million Q2 subscribers in the second quarter, about 1.1 million more customers than during the same period last year. In comparison, though Netflix also lost some subscribers, the streaming giant gained totaled 151.6 million paid subscribers around the world at the end of Q2, with 60 million of those coming from the U.S. Hulu also saw a climb in its numbers, reaching 28 million paid subscribers while PlutoTV amassed 18 million users.

But according to analyst Craig Moffett of MoffettNathanson, cord-cutting is about to hit a lull. His reasoning is that by the end of Q3, fervent cord-cutters would have already left pay TV. He also believes that satellite TV operators such as DirecTV and Dish Network, which collectively saw their rate of attrition hit 10.2%, will have to restrategize.

He stated, “As subscribership gains for the vMVPDs have slowed … the starry-eyed ambitions of their corporate parents that they would eventually monetize huge subscriber bases with addressable advertising and/or other ancillary revenue streams have taken a significant hit,” Moffett wrote. “Witness AT&T’s dramatically different tone with respect to DirecTV Now, which was once a pillar of their ‘modern media company’ strategy and now, just 18 months later, looks to be slated for something close to elimination in factor of a completely different approach with HBO Max.”

Moffett’s analysis seems to echo that of a previous report by Comscore, which found that live TV streaming was growing, but not as fast as before. The report found that the use of pure-play virtual MVPD services on OTT is increasing, but much more slowly than in the past. The average year-over-year growth in households between March - May 2018 was 48%, compared to the 21% year-over-year growth which occurred between December 2018 - February 2019.

The stalled growth was attributed to the fact that as live TV streaming services saw $5-10 price increases, as well as dramatic reductions in promotions — most specifically DIRECTV NOW. The streaming service saw a stunning 267,000 subscriber loss after removing device deals like a Free Apple TV 4K, their 3 month for $10 plan and discounts on the service for AT&T customers.