Another million U.S. consumers canceled their conventional cable service last quarter, extending a long-standing trend. That brings the total tally of cord-cutters since cable TV's 2014 peak to a figure of around 20 million, depending on how you're figuring the numbers.
There's a curious detail that now has to be added to any discussion of the cable television industry's continued cable subscriber losses, however. That is, people will still buy cable TV. They'll even pay a reasonable premium for a complete package, even knowing they'll not be watching most of the programming offered to them. What's changing is how these consumers watch cable programming, and who they buy it from.
Image source: Getty Images.
Another 1 million people cut the cord
In the three-month stretch ending in September, cable giants like Comcast (CMCSA +3.71%) lost another 273,000 cable TV customers. AT&T (T +3.69%) shed another 590,000 premium television subscribers, most of whom presumably said goodbye to its DirecTV satellite cable service. In that vein, DISH Network (DISH +0.00%) lost another 60,000 satellite TV customers during the third quarter. Nearly 68,000 Altice (ATUS +0.66%) television customers cut the cord during the same quarter. Verizon (VZ +3.89%) saw 61,000 of its video customers cancel service too.
The only conventional cable name to add new users last quarter was Charter Communications (CHTR +7.12%), which managed to bring another 67,000 paying customers on board. As was explained in early November though, Spectrum's cable customers are paying a lot less per month now than they were just earlier this year. In a world where carriage fees paid by cable companies never seem to stop rising, these price breaks could prove problematic sooner or later.
All told, the nation's six biggest names in the linear cable business (which makes up about 95% of the industry's total subscriber connections) collectively lost 985,000 conventional cable customers. Adding in the smaller providers, one could say America's cable business lost another million households during the three-month stretch ending in September.
Data source: Cable companies' quarterly investor updates. Chart by author.
That's technically a slowdown from the losses suffered in 2019 and in the first half of 2020. But that slowdown also reflects the fact that there are now fewer people left to cut the cord.
Well, this is strange
That's an ugly trend, even if it is slowing. There's something going on, however, that investors should note. That is, consumers may still be proverbially cutting the cords that pipe cable television signals into their homes. They're no longer giving up cable on a net basis, though. They're buying it in droves from providers that aren't your typical cable providers.
Walt Disney's (DIS +0.87%) Hulu + Live is one example. This subscription-based streaming service still offers a wide variety of on-demand programming. Consumers willing to pay $54.99 per month can enjoy live programming from more than 65 channels that have traditionally only been available through linear cable -- channels like HGTV, FX, Lifetime, and Discover, as well as broadcasts from networks such as CBS and NBC. Disney added about 700,000 Hulu + Live users to its roster last quarter, bringing its total headcount to 4.1 million.
It's not just Walt Disney doing well with streaming cable, though. Alphabet's (GOOGL 0.31%) (GOOG 0.51%) YouTube TV now boasts more than 3 million customers, up from MoffettNathanson's estimated headcount of 2.5 million as of the end of the second quarter. DISH Network's Sling TV brought 210,000 subscribers into the fold last quarter, offering them a decent "skinny bundle" mix of cable television channels for only $30 per month. FuboTV now serves 455,000 streaming cable customers, picking up 167,000 more during Q3.
In fact, even subtracting AT&T's loss of 37,000 over-the-top television subscribers, the streaming cable industry chief players added over 1.5 million paying customers in the third quarter of this year. That's more than the traditional cable industry lost.
Data source: Cable companies' quarterly investor reports, and analyst estimates when corporate-supplied data is unavailable. Chart by author.
Cable companies can't ignore the new norm
While the disparate results are eye-popping, don't necessarily expect streaming cable's growth to outpace linear cable's losses going forward. It might. But the unusual circumstances of the COVID-19 pandemic are likely to be the chief accelerator of these opposing trends. Both are apt to slow as the world works its way back to its pre-COVID condition.
Nevertheless, the trends -- and the streaming cable trend in particular -- were already in place. They were only exacerbated by this year's circumstances, and not caused by it.
For investors, the take-away is simple enough. This data shows there is a path out of the cord-cutting rut for providers willing and able to take it. So far, though, most of the key cable players haven't done much with the opportunity. Comcast's Peacock and AT&T's HBO Max are indirect stabs in this shift, but non-cable names Alphabet and Walt Disney are the only outfits truly embracing the idea of fully replacing linear cable with a lower-cost streaming alternative. It's clearly becoming a growing problem for conventional cable companies, which would have to compete against themselves with a lower-proceed service than the cable packages they already offer if they wanted to plug into the streaming cable growth trend.
As the old saying goes, though, sometimes you gotta do what you gotta do.
