vMVPD customer base reaches 4.6M but has only recaptured a third of cord cutters, analyst says

Sling TV
(Sling TV)

Virtual MVPD services including Sling TV, DirecTV Now, Hulu Live, Sony PlayStation Vue and YouTube TV added 2.6 million customers in 2017 and finished the year with around 4.6 million subscribers, according to MoffettNathanson analyst Craig Moffett.

But the OTT services have collectively recaptured only a third of the 13.5 million users who have left the pay TV ecosystem since 2010, the analyst estimates in his latest quarterly “Cord Cutting Monitor,” which was published today. (Click here to visit MoffettNathanson’s subscription-only site.)

For his part, Moffett attempts to answer an essential question: Are slightly fewer younger consumers still in the larger pay TV tent because of vMVPDs? Or are these OTT services actually eroding the far more profitable linear portion of the business faster?

“Is it the case that the current uptake of vMVPDs is boosted by pent-up demand of the 13 million? Or, alternatively, have many of these 13 million been lost to the category forever, happily making do with SVOD and other nonlive alternatives, while the current crop of cord cutters are overwhelmingly leaving for vMVPD alternatives? We don’t know, … but it makes a huge difference in forecasting what happens from here.”

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With Dish selling Sling TV at a base price of $20 a month, and AT&T peddling DirecTV Now at a base of $35 a month, Moffett remains glib about the prospects of virtual services serving as replacements for traditional cable, satellite and IPTV.

"Dish Network and AT&T's Entertainment Group (which includes DirecTV Now) announced Q4 revenue growth of … well, OK, their revenue growth wasn't very good, coming in at -5.4% and -3.5%, respectively. But at least they're making money! Well, come to think of it, their EBITDA growth was pretty bad, too, coming in at -21.5% and -11.2%, respectively,” Moffett said. 

Programmers, he added, are making out better, “but there is a lot of variation between those that are on all platforms vs. those that are on some platforms. For network owners like Fox and Turner, which are included on all five of the Big Five vMVPDs, affiliate growth looks pretty consistent with the halcyon days pre-2015. For companies like Viacom and Discovery, which aren’t on every vMVPD, affiliate fee growth is sliding down to the low single-digit range.”