AVOD could lead to consumers skipping MVPDs and vMVPDs alike

From left to right: Rob Pegoraro, contributor; Marci Ryvicker, Wolfe Research; Ian Olgeirson, Kagan.

DENVER—The pay TV industry has seen traditional TV subscribers decline and virtual MVPD subscribers increase, but ad-supported streaming TV could throw a wrench in that balance.

Marci Ryvicker, managing director at Wolfe Research, said the consensus of where the U.S. pay TV subscriber universe could shake out is 70% traditional and 30% virtual. But she said that ad-supported services like Pluto TV could create an “air pocket” where people are completely out of the pay TV ecosystem.

“They could have an antenna, they could have Pluto TV and Netflix, and then they’re done,” said Ryvicker on Monday during the FierceVideo Pay TV Show.

Pluto TV isn’t the only ad-supported streaming service in the market. Roku has the Roku Channel, Amazon has IMDb Freedive and NBCUniversal has its ad-supported streaming service coming next year (though that service will only be available for free to existing pay TV subscribers. There’s also Xumo, Tubi and STIRR, which was launched earlier this year by the Sinclair Broadcast Group.

Of course, these services don’t account for the potential impact on pay TV subscriber bases from subscription services including stalwarts like Amazon Prime Video and Netflix along with upcoming services like Disney+ and WarnerMedia’s SVOD.

RELATED: Roku in position to ride the AVOD wave

Ian Olgeirson, research director at Kagan, noted how pay TV subscriber losses already accelerated during the first quarter and that’s before the anticipated impact from Disney+, Apple TV+ and WarnerMedia launching.

But vMVPDs may also be impacted by the growing SVOD and AVOD landscape. AT&T’s DirecTV Now reported its second consecutive quarter of subscriber losses, and Dish Network’s Sling TV continues to see its growth slow. As Ryvicker pointed out, it’s difficult to predict how other services like YouTube TV and Hulu with Live TV are doing since they don’t publicly announce subscriber totals.

Those subscriber losses for DirecTV Now are stemming from promotional pricing runoff and price increases.

Ryvicker said that AT&T went too promotional at first with DirecTV Now and accumulated debt, so the company had to raise its prices and it lost customers. She was surprised YouTube TV would have to raise prices because of Google’s deep pockets and she said Sling TV prices likely won’t go up anytime soon unless the service starts adding more content.

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