According to Moffett Nathanson, the rate of decline for the traditional pay-TV sector stopped accelerating in the first quarter of 2018 and in the second quarter ended 30 June 2018, it calculated that the rate of decline actually improved, to 3.3% year-on-year in Q2 from 3.4% last quarter. Whilst it accepts that that a tenth of a percentage point improvement isn’t significant, it said the key thing was that the improvement marked the second consecutive quarter that saw fewer subscriber losses than in the corresponding quarter last year.
It then postulated that depending on assumptions made around PlayStation Vue, Hulu Live, and YouTube TV – none of which formally report subscriber numbers – it was actually possible that the total number of households paying for a TV subscription in the US actually grew for the first time since 2012.
Offering evidence for its theory, Moffett Nathanson said that in the last quarter, the real number for analysts to watch was conversion rate, or the ratio of losses by traditional pay-TV to gains by vMVPDs o r the rate at which households that leave traditional linear TV convert to OTT linear TV instead. This argues the analyst was probably the best barometer of health of the programmers.
Moffett Nathanson adds that anything that helps stem the slide in subscribers is welcome, particularly if the conversion rate can remain above 70% or so. Indeed, it estimates that the average conversion rate over the last few years is around 85%. And that there was even better news in the fact that affiliate fees associated with vMVPDs are actually higher than the affiliate fees associated with the major cable and satellite MSOs.
This Moffett Nathanson says is great news for the media companies, or at least for those media companies included in most or even all of the vMVPD packages.
Furthermore, the analyst regards the price differential between traditional pay-TV and vMVPDs remains very large, so there’s no reason to assume that a large number of customers will move back to traditional cable or satellite services. But it cautioned that it was easy to imagine that the rate of migration might take a hit as the monthly hurdle for OTT subscriptions rises.
The ultimate thing is that if it’s data is accurate, this believes Moffet Nathanson is all great news for the media companies, or at least for those lucky few media companies included in most or even all of the vMVPD packages.-Rapid TV News