Hulu + Live TV and YouTube TV helped contribute to the best-ever quarter of subscriber growth for virtual MVPDs, according to MoffettNathanson.
The analyst firm estimated that vMVPDs collectively added 1.5 million subscribers during the third quarter after weak growth throughout the first half of 2020 and in spite of recent price hikes. MoffettNathanson estimates there are now 11.5 million vMVPD subscribers in the U.S.
However, the firm leaned away from the theory that the first half of the year was a temporary phenomenon for vMVPDs and toward a more bearish inclination that live streaming TV services are witnessing seasonal churn due to so many professional sports coming back at once.
“To be clear, at this point, the hypothesis that what we are witnessing is seasonal churn is just that: a hypothesis. It will take some time to see whether vMVPD growth rates become more volatile as time goes on (or whether vMVPDs return to a slower observed growth rate of additions as one sports season begins are partially offset by cancellations as another one ends),” wrote Craig Moffett in a research note. “But it is a hypothesis that fits the data, and is intuitively consistent with the most prominent features of the new category. All vMVPDs aggressively advertise that there are no contracts or commitments required; the services can be turned on and off at will.”
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vMVPD growth during the third quarter was largely led by Hulu, which added 700,000 subscribers and ended the period with 4.1 million, more than some traditional MVPDs like Verizon and Altice USA. According to MoffettNathanson’s estimates, Google’s YouTube TV added 500,000 subscribers during the quarter, taking the service past the 3 million subscriber mark.
The research firm said that the strong quarter helped improve the conversion rate for MVPDs to vMVPDs to 31.5% and helped set the rate of decline for total pay TV distribution (including vMVPDs) to 4.6%, 70 basis points better than one quarter ago.
“With the rebound in conversion rate, the rate of decline for total pay TV distribution – that’s ultimately what matters for cable networks – moderated significantly in the quarter,” Moffett wrote.