Disney+ and others are quickening the death of live entertainment TV, analyst says

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MoffettNathanson said that the third quarter was the fifth consecutive quarter of accelerating pay TV subscriber declines. (Pixabay)

As cord cutting trends accelerate and new SVOD giants like Disney+ take their first steps in the world, one analyst is ready to proclaim live TV dead.

Actually, MoffettNathanson analyst Craig Moffett clarified that statement in a recent research note. He said sports viewing is thriving and live news, with the upcoming election and presidential impeachment proceedings, is increasingly relevant. But the live TV model for entertainment is being displaced by SVOD and AVOD services much faster than cord-cutting figures suggest.

“The long-awaited bifurcation between live (sports and news) and on-demand (entertainment) is gathering momentum,” Moffett wrote.

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The recent launches of Apple TV+ and Disney+, along with the upcoming launches of HBO Max and Peacock, are contributing factors to live entertainment’s decline. But cord cutting may be a bigger contributor. MoffettNathanson said that the third quarter was the fifth consecutive quarter of accelerating pay TV subscriber declines and that the conversion rate of traditional MVPDs to virtual MVPDs has been falling over the past 12 months.

MoffettNathanson estimated that vMVPDs – including Sling TV, AT&T TV Now, Hulu with Live TV, YouTube TV, FuboTV and PlayStation Vue – collectively added just less than 600,000 net subscribers in the third quarter. That compared to the 1.74 million video subscribers lost during the quarter by AT&T, Charter, Comcast and Verizon combined.

“Today, SVOD and AVOD alternatives for general entertainment appear poised to overtake vMVPDs (although, to be fair, this, too, is only an expectation; consumers haven’t really had the chance to vote for most of the coming SVOD and AVOD alternatives to Netflix yet),” Moffett wrote.

The firm said the exodus of entertainment-only consumers from the TV bundle means that entertainment programming networks are losing their pricing power in negotiations with distributors. That will lead to declining affiliate fees. During the third quarter, cable network affiliate fee growth slowed down to 1.6%, which MoffettNathanson said was the slowest rate it had ever observed. The firm said Discovery reported the highest growth rate at 5.6%, followed by Turner at 4% and NBCUniversal at 1.6%.