Cord cutting growth stabilized in Q1 while transition to vMVPDs quickened, analyst says

Scissors cutting cord
With gains made by vMVPDs factored in, cord cutting slowed to its slowest rate of growth since 2015. (Pixabay)

Cord cutting is actually getting slower … or at least, it didn't get any faster in the first quarter.

That’s the conclusion today of MoffettNathanson analyst Craig Moffett, who said that the rate of growth for cord cutting held flat at 3.4% in the first quarter, matching the 3.4% growth rate in Q4. 

UPDATED: An earlier version of this story confused the term "conversion rate." To clarify the discussion, we're removed the terminology and related content from the updated version of the story. 

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Meanwhile, the overall growth rate of pay TV cord cutting declined to just 0.5% once vMVPDs were factored into the math. That’s the lowest rate of decline since the fourth quarter of 2015. 

RELATED: AT&T adds 312K DirecTV Now users in Q1, drops 187K linear customers as ‘transition’ continues

AT&T probably provides the best illustration of this dynamic, with gains of 312,000 subscribers by vMVPD DirecTV Now in the first quarter more than offsetting sustained losses by DirecTV satellite and U-verse TV. 

This is good news for operators of media networks, which are now losing far less subscribers. 

“They actually get paid more (a higher per subscriber affiliate fee) as well,” Moffett wrote. “That’s not to say a skinny bundle is a perfect replacement for a fat one—remember, not every network is in every vMVPD bundle—but it’s a whole lot easier to face a future where 70% or 80% of all cord cutters are still paying for a streaming video bundle, even if its a skinny one, than to face a future where, say, more than half of all cord cutters are lost entirely to the ecosystem.”

For his part, Moffett has hardly been supportive of what vMVPDs are providing to the bottom lines of their respective operators right now, with the small monthly consumer fees in many cases, he analyst suspects, not even offsetting programming costs.

However, both AT&T and Dish Network used their first quarter earnings calls to tell investors that new features, such as cloud DVR, as well as improvements in advanced advertising, will provide new revenue streams for vMVPDs.

“We actually have more subscribers today than we did two years ago because of the success of DirecTV Now,” said AT&T CFO John Stephens in the company’s first-quarter earnings call last month.