Traditional TV Fights Sub Losses; Direct OTT, Fewer Ads Among Solutions

watching tv

NEW YORK – Seven major services – DirecTV, Dish Network, Comcast, Charter, Altice, U-Verse, and FiOS – combined to lose 3 million subscribers last year, reports nScreenMedia.

Dish Network suffered the worst, with 1.14 million lost subscribers – a 10-percent decline – and AT&T U-verse dropped 622,000 subs. Overall, satellite services lost 5.4 percent of their subscribers, while telco services lost 8.5 percent, and cable operators slipped 1.2 percent. These seven companies represent 85 percent of all traditional pay-TV subscribers.

At the same time, MoffettNathanson research estimates that new virtual multichannel video program distributors (MVPDs) like YouTube TV, Hulu, and DirecTV grew by 2.6 million in 2017 to 4.6 million. 

MoffettNathanson says while traditional pay-TV providers lost around 3.4 percent of their subscribes, as of fourth-quarter 2017, including virtual MVPD numbers leaves the overall decrease in 4Q at 0.7 percent – similar to the 0.6-percent slip in fourth-quarter 2016.

MoffettNathanson adds that U.S. affiliate revenues and retransmission fees continue to save major TV network companies – even as national TV advertising dollars suffer. Total broadcast retransmission revenues and cable network carriage fees grew 8.5 percent to $10.93 billion in the fourth quarter of last year.

U.S. basic cable network fees (excluding SVOD revenues) were up 6.2 percent to $9.6 billion for the final three months of 2017, with broadcast networks' retransmission fees nearly 29-percent higher at $1.3 billion.

Meanwhile, legacy TV companies are going direct-to-consumer with over-the-top (OTT) streaming video products. One example: Discovery Inc., the product of last week’s merger between Discovery Communications and Scripps Networks Interactive. 

Discovery CEO David Zaslav hinted at the possibility while talking with The Wall Street Journal, saying a service with content from Discovery, Scripps, and potentially others could be priced around $7 per month. And Viacom has said it will launch a direct-to-consumer OTT offering later this year that will complement what it’s doing in the MVPD space rather than compete with it.

Analysts say that, so far, most of the OTT offerings from traditional TV players are designed to complement, rather than disrupt, their cable bundles. 

Another emerging trend: making traditional TV more like digital TV, with reduced commercial time.

Case in point: Fox Networks Group reports it wants to cut advertising on its networks to two minutes per hour by 2020. And NBCUniversal said it plans to reduce the number of ads in its commercial pods by 20 percent and the total ad time by 10 percent on more than 50 original prime-time programs across its networks. Turner’s TruTV has already been reducing ad loads on its original programs and plans to expand that trend during the next three years, and its sister network TNT has also experimented with reduced ad loads in some original programming, according to Turner.

Chris Linn, president of TruTV, tells Digiday, “We’ve been stuffing content with ads for way too long, and across the landscape, you can see the negative impact it’s had. For too long, everyone has been leaning into what has worked in the past, but that’s not what is going to work moving forward. The bottom falls out quickly if you don’t meet the changing needs of your audience.”

Mark Marshall, executive vice president of entertainment ad sales for NBCUniversal, says the average episode of NBC’s “The Voice” is watched for 35 minutes on live, linear TV, 43 minutes on connected TV devices, and 48 minutes on digital video recorders. 

“It’s the same show, it’s the same piece of glass, so why are they watching longer on digital properties? Part of it is because there’s a lower ad load on that side,” said Marshall. “The whole goal is to make TV look more like digital TV.”