Power

Why cord-cutting more than doubled in 2019

Skinny bundles, once seen as the industry's savior, aren't immune to subscriber defections.

A Dish Network van in California

Cable and satellite TV subscribers left in droves in 2019.

Photo: Bloomberg via Getty Images

Last year was another rough year for the pay-TV industry.

The major cable and satellite TV operators collectively lost around 5.8 million subscribers in 2019, compared with 2.3 million in 2018. In the fourth quarter alone, the top five operators lost 1.5 million subscribers in total. Cord-cutters have continued to move en masse to services like Netflix and Hulu, as well as newer, more affordable streaming services from Disney and Apple.

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Hidden in those numbers is another notable trend: Some internet-based TV services like AT&T TV Now (formerly DirecTV Now) and Dish's Sling TV, which were once seen as a way to win cord-cutters back, weren't able to cover for these massive losses. AT&T's service alone lost 674,000 subscribers in 2019. Sling TV managed to add 175,000 subscribers — not enough to make up for a massive defection of Dish subscribers.

This trend has a lot to do with pricing: After initially positioning these services as skinny bundles, operators are increasingly feeling the squeeze from growing content costs, resulting in higher prices for consumers. AT&T's internet-TV service in particular has seen massive price increases.

When AT&T first introduced the service in late 2016, it offered subscriptions for as little as $35 per month. During a series of price increases in October, it told some of those early customers that they would have to pay as much as $85 per month going forward — a tough pill to swallow for consumers who transitioned to streaming to save money. The average traditional cable bill is around $110.

Some of the internet TV services from companies not weighed down by a traditional cable business have seen growth in 2019. Disney announced earlier this month its live-TV service from Hulu had signed up 3.2 million subscribers by the end of 2019, and Google disclosed 2 million paying YouTube TV subscribers in its latest earnings release.

However, some of those gains may be due to industry consolidation: Sony announced the closure of its PlayStation Vue TV service in October. "Unfortunately, the highly competitive Pay TV industry, with expensive content and network deals, has been slower to change than we expected," the company said at the time.

Those same industry dynamics also all but assure that cord-cutting is going to continue at a significant pace in 2020 and beyond. Analyst Michael Nathanson estimated last year that up to 40% of the pay-TV industry's subscriber base may be at risk, with only hard-core sports fans sticking to their TV services out of necessity. Nathanson's remarks were echoed by Roku CEO Anthony Wood this month, who estimated that half of U.S. TV households won't have a pay TV subscription by 2024.

The cord-cutting trend will likely be driven on further by the growing emergence of cheap subscription video services. Disney+, which launched in November for only $6.99 per month, already reached 28.6 million paying subscribers earlier this month, and Apple TV+ is estimated to have 33.6 million subscribers. AT&T, meanwhile, is set to double down on streaming with the launch of its HBO Max service in May.

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Photo: Kirill Kudryavtsev/AFP via Getty Images

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Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

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Image: Adobe

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