It’s been a chaotic quarter across the earnings board for most of Hollywood. But the tightening of budgets and rocky subscriber figures across the board for the streaming market has somewhat obscured another trend- the majority of Pay TV services have also seen a reduced growth outlook and increased subscriber losses. Blake & Wang P.A entertainment attorney, Brandon Blake, analyzes this in more depth.

1.9M Net Pay-Tv Losses

For Q2, we saw a little under 2M losses for the Pay-Tv market. Overall, this figure swells to 5.425M over the last year, building on the previous year’s 4.55M losses. Nor can it be pinned on a particular service- Hulu, DirecTV, Verizon, Comcast, Charter, Altice and Cox all reported subscriber losses, with DirecTV and Comcast taking the ‘lead’. 

Nor are Wall Street analysts willing to chalk this one up to the turbulent economic times, as they are with the lackluster streaming results from the quarter, either. The current broader Pay-Tv subscriber base has shrunk to a mere 80% of the peak we saw in 2015, and little seems set to change. In penetration terms, this reduced the load to 55% of households, from the peak at 81%.

In addition to simple preference for streaming services, some of these losses have been chalked up to ‘subscription fatigue’ and general budget trimming in the face of an unstable economic environment.

Linear Leads the Downward Pack

Linear sub drops were where companies saw the most pain, accounting for 1.78M of the losses, with virtual multichannel video programming bring the further 478,000 to the table. This 5.2% drop builds on the 3.7% from the first quarter of this year, and eclipses the 4.3% seen in the same quarter last year. Predictions for the current year have been raised to 5.8%, with an even larger 6.7% expected for 2023.
Hollywood, traditionally at least, has seen much of their earnings and revenue stem from cable network units, especially advertising and affiliate fees. With the overall economic climate for advertising also on a downturn in some key markets, it does leave some notable durability red flags for the next year.
Of course, there’s no need to rush to doom on these figures alone. Of all the ‘traditional’ cable companies, we only really see Paramount Global, Fox Corp, and AMC Networks retaining their highest exposure in this segment. Cord cutting in the next 18 months, however, is highly likely across all segments.
While it’s still far too early to call ‘time of death’ on the Pay-Tv market altogether, especially with the possibility of upcoming economic corrections and the turbulence in the streaming market, it’s certainly a worrying trend. It does seem reasonably clear that the heydays of cable-TV as a core market driver, at least, are on the wane. For now, the digital transformation of the entertainment industry seems to be near total. As we’ve seen highlighted all-too-well this quarter, however, these things are never set in stone.

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Olivia is a seasoned blogger with a flair for lifestyle and fashion. With over 6 years of experience, she shares her passion for the latest trends and styles, offering inspiration and guidance to her audience on all things lifestyle-related.