Consumers Continue To Cut The Cord On Traditional Cable And Satellite TV

With people confined to their homes as a result of COVID-19, there's not a whole lot to do besides binge-watch television shows. With plenty of time to catch up on shows, viewership of classics such as The Sopranos has jumped 179%.

In the case of The Sopranos, the large spike in interest could be attributed to HBO's decision to offer its library of content for free ahead of this month's launch of HBO Max.

The move by HBO is the latest example of how content providers are trying to lure consumers to their streaming services and away from traditional cable and satellite TV.

According to MoffettNathanson, the first quarter saw 1.8 million consumers drop their pay-TV subscriptions. The decline represents a 7.6% annualized rate, which is the fastest decline in pay-TV subscribers ever recorded.

"At 63% of occupied households, traditional pay TV penetration has reached a level not previously seen since roughly 1995," analyst Craig Moffett wrote in a report. "There are now as many non-subscribing households (46M) as there were pay TV subscribers in 1988."

Satellite TV was hit particularly hard in the first quarter with AT&T (NYSE:T) losing one million subscribers, mostly from DirecTV. DISH Network (NASDAQ:DISH) lost 413,000 subscribers during the first quarter, the company's largest quarterly decline on record.

Internet delivered "virtual" TV providers also showed a net decline during the first quarter. AT&T TV Now, Dish's Sling TV, Hulu + Live TV, YouTube TV and FuboTV lost more than 300,000 subscribers combined.

One of the reasons the first quarter may have seen a record-setting decline in subscriptions is likely the result of sports being cancelled. A survey from The Trade Desk found that 60% of Americans say watching live sports is the primary reason they have kept their cable TV subscriptions.

With many networks locked in to lucrative sports broadcasting contracts, we've seen deals that years ago would've seemed highly improbable such as the NFL striking a deal with Amazon (NASDAQ:AMZN) to stream games.

With virtually every company launching some sort of streaming service, the future may mean less profits for the industry as a whole, according to Moffett.

"Notwithstanding the princely valuations being accorded SVOD platforms like Disney+, we doubt the DTC lifeboats will ever come close to matching the profitability of the business they are ostensibly designed to replace."

While traditional cable and satellite TV continues to struggle, Netflix (NASDAQ:NFLX) added nearly 16 million subscribers last quarter, bringing the company's total subscriber count to nearly 200 million globally.

As people continue cord-cutting at a record rate, it will certainly be interesting to watch the industry continue to fight each other in the coming years.