Pay-TV Subscription Losses Are Leveling Off

Cable and satellite companies still under threat from cable-cutters

The cord-cutting trend appears to have been stemmed for the time being, at least according to recent MoffettNathanson figures, which show that Q2 pay-TV subscriptions fell by only 305,000—a sizable drop from last year’s second-quarter loss of 387,000.

As the research firm’s chief analyst Craig Moffett noted, annualized cord-cutting rates stabilize at 400,000 when factored in with Q2 household-formation levels, all of which becomes minuscule in light of pay-TV’s roughly 100 million U.S. customers.

Still, the days of subscription television could be numbered in the long run, considering how most of the current revenue growth is due to the acceptance of rate hikes among pre-existing customers. Once that bubble bursts, pay-TV could see a mass exodus toward online options like Hulu and Netflix.

Hoping to prevent such a trend, cable providers like Comcast and Verizon are offering more flexible options to subscribers, including deals that feature one premium and several dozen basic channels at smaller rates than regular packages.

At the other end of this viewership tug-of-war, Netflix co-founder Reed Hastings drew attention to his company’s newfound lead over HBO in subscription revenues. However, the comparison could be dubious, considering the streaming service’s significantly higher operational costs.