Cord-Cutting Q1 2022 Review: The Cycle of Decline Continues
The first quarter of the year always brings with it cord-cutting decline.
This relates to the NFL cycle, which, much as the moon pulls on the tide, brings some subscribers back to pay TV in Q3 and Q4, only for them to depart once the Super Bowl is over.
2022 is no different, with the total number of subscribers across reporting companies now at 53.7 million, a decline of 2.5 million (-4.5%) from the 56.2 million seen in Q1 2021.
More worrying is the fact that when comparing with the prior year, 2022’s first quarter has an accelerated rate of decline. The last three years have seen between 2.2M and 2.4M MVPD subscribers from Altice USA, Charter, Comcast, Dish and Verizon cancel subscriptions. This year that leaped to -3.2 million.
At the same time, VMVPD YoY subscriber gains are also slowing. This year sees the lowest annual increase across Hulu, FuboTV and Sling — the only VMVPD providers sharing figures — in four years, with subscriptions up by 642K. VMVPD services do offer those cutting traditional pay TV services a way to keep watching what they want, but it seems ever more customers are opting to exit the system entirely.
In terms of individual company performance, when comparing Q1 2022 subscribers with those of Q1 2018, only Hulu and FuboTV have added subscribers. If DirecTV still reported its subscribers, they would most likely be No. 1 for losses, but in their absence the sad honor falls upon Comcast, which lost 4.2 million pay TV subscribers over the period.
But all is not lost for traditional cable companies, at least if they also offer broadband subscriptions. These are much more profitable subscriptions for providers — unlike cable TV service, where the provider must pay each channel a monthly fee for carrying its channels, internet service does not include giving websites any money for allowing access to them — and have been growing with each quarter.
Whilst some analysts have become concerned about slowing rates of broadband growth, it’s important to note that service providers offer within geographic confines. In other words, a slowdown was always in the cards, as the maximum number of customers begins to be reached.
There’s more potential good news for Comcast in particular. The Bipartisan Infrastructure Law’s Affordable Connectivity Program, which will allow for reduced cost or free high-speed internet access to many poorer Americans, is now underway.
VIP+ has previously covered how this will be a boon for free streaming service providers, as it will mean millions of new viewers to monetize via ads, with this likely a factor behind several services announcing a slew of original content for their free service in the 2022 NewFronts.
Comcast has two free streaming services in Xumo and Peacock, both integrated into their Xfinity Flex streaming box, which is free for Xfinity internet subscribers. So long as Comcast opts to give free and low-cost subscribers access to Flex, it will be able to boost ad revenues by being able to position its free content in front of users watching on their TV (as well as the PR boost from giving poorer households a free streaming device for their TVs, saving them from buying a Roku or Apple TV or Chromecast and allowing them to take advantage of their new high-speed internet).
Thus, while pay TV continues its slow subscriber decline, there are opportunities both for providers offering broadband service and especially for those with a free streaming service designed to enhance their relationship with subscribers.
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A note on VIP+’s customary analysis of the results for the quarter and a change to our reporting. Since DirecTV went into private hands in August 2021, it has not shared subscriber counts for the company's MVPD or VMVPD services. Alphabet’s VMVPD service, YouTube TV, has not shared a subscriber figure since Q3 2020. To precisely estimate within the margin of error for a service the size of YouTube TV, an immense sample size would be required. For now, these services are not included in our analysis, owing to a lack of transparency.