If you want to see the impact streaming is having on the entertainment industry, look no further than the annual report from Walt Disney (NYSE:DIS), which shows the multimedia giant suffered steep, across-the-board declines in subscribers on all its pay TV properties.

While it has been able to offset some of the losses through the launch of services like ESPN+ and is planning for the eventual dissolution of cable with its own streaming service start-up next year, the broad-based nature of viewer defection continues to have an impact.

U.S. subscribers severing their relationship 

Disney's media division was once again the company's worst-performing unit. While movies and theme parks continue to shine, U.S. cable programming remains a dismal swamp of decline, with each of its properties losing millions of subscribers in the company's fiscal 2018, which ended in late September.

Domestic Service

2018 Subscribers

2017 Subscribers

Loss

Disney Channel

89 million

92 million

3 million

Disney XD

71 million

74 million

3 million

Disney Junior

69 million

72 million

3 million

ESPN

86 million

88 million

2 million

Freeform

88 million

90 million

2 million

Data source: Disney 10-K forms. Numbers are estimates from Nielsen Media Research.

Though Disney more than made up for the 13 million losses in the table above in gains in the international market -- adding a combined 24 million new subscribers overseas for ESPN, Disney Channel, Disney Junior, and Disney XD -- the domestic market continues to contract. Freeform is not sold overseas.

Looking longer term, Disney has reportedly lost 13 million subscribers over the last five years at its premier ESPN channel, which says a lot about the impact cord-cutting is having, because the sports channel remains a key component of most cable packages. While 2018's losses may point to a slowing in the rate of decline, things are still bleak.

Deteriorating position of pay TV

Disney has offset some of the declines with ESPN+, which has gained 1 million viewers (at an extra cost of $5 per month, no less), but that only points to the need for the entertainment leader to be successful with its namesake streaming service in 2019. If it can offset the losses by attracting subscribers, Disney's positioning will be stronger for what comes next for the industry, because it wasn't alone in seeing viewers flee its cable offerings.

Man cutting cable cord with scissors

Image source: Getty Images.

In its third-quarter earnings report, satellite TV operator DISH Network said it lost 367,000 subscribers, it worst performance ever, and ended the period with fewer than 10.3 million subscribers while gaining only 26,000 Sling TV subscribers to end with 2.37 million. Comcast lost 106,000 subscribers, slightly fewer than the 125,000 it lost last year for the period, though it did add 363,000 broadband internet accounts.

According to research firm MoffettNathanson, cable and satellite TV providers lost some 1.1 million subscribers during the third quarter, a mass exodus that ranks as the industry's worst quarterly loss ever and also marks the first time the industry has lost more than 1 million subscribers in a three-month period.

Good news for Disney investors it that it is set to gain a 60% stake in Hulu when it completes its acquisition of Twenty-First Century Fox, and there are reports it could gain full ownership, as AT&T and Comcast are open to selling their respective positions in the joint service.

That could propel Disney forward in the streaming market, giving it a cudgel to batter Netflix while also minimizing the impact cord-cutting is having on its pay TV programming.



Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NFLX and Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.