In a sure sign that the second quarter will mark a major recession in the number of pay-TV subscribers, IPTV services Verizon FiOS (NYSE: VZ) and AT&T U-verse (NYSE: T) combined to have their worst quarter of video customer growth ever, adding only 4,000 subscribers between them.
On Tuesday, Verizon said it had gained only 26,000 video subs in the second quarter of 2015 versus 100,000 in the second quarter of 2014. Two days later, AT&T said it lost 22,000 video customers compared to an addition of 190,000 in Q2 2014.
Jump back two years and you'll see that the two companies added 373,000 IPTV video subscribers in the second quarter of 2013.
FierceCable asked media investment analyst Craig Moffett if this was the slowest quarter for IPTV growth in the U.S. ever. He confirmed that it was. Earlier in the month, Moffett released a note to investors predicting significant retrenchment of pay-TV subscribers in second-quarter earnings reports.
So far, his prophecy is more than holding up. The nation's leading cable company, Comcast (NASDAQ: CMCSA), is seeing a significantly slower rate of video subscriber defections, but it still lost 69,000 TV customers in the second quarter. (Although, that was better than the 120,000-sub loss Moffett had forecasted.)
Over the last several years, explosive growth of the two IPTV services, combined with the modest expansion of the maturing satellite TV business, combined to more than offset huge declines in cable subscriber bases. But the analyst predicts that satellite operators Dish Network (NASDAQ: DISH) and DirecTV (NASDAQ: DTV) will enter an era of subscriber recession. And even with the flattening out of cable's video user base, the metrics, he says, indicate that a lot of consumers are no longer jumping between pay-TV services--they're exiting the market altogether.
"Seasonality won't help," Moffett wrote. "The second quarter is always the weakest of the year. We estimate that the pay TV sector shed 321,000 subscribers in Q2 of last year. This year, we expect that number to be markedly worse."
Related articles:
AT&T loses 22K U-verse video subs in Q2, promises DirecTV acquisition will 'transform our industry'
Verizon FiOS video growth slows to 26K subs in Q1, but skinny TV bundles 'exceed expectations'
Moffett: Customers to drop cable TV subscriptions at even faster rate in Q2