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July 29, 2016 | Authored by: Vindicia Team

Traditional TV subscription rates fall as online video is expected to increase

It seems more customers are navigating away from traditional television services, regardless of whether they use cable or satellite. For instance, the outlook for Verizon is a little rocky, despite the company's recent purchase of Yahoo. Verizon lost 41,000 television subscribers in Q2, reported The Consumerist. Approximately 4.6 million customers remain, putting Verizon behind large competitors like Comcast and even small ones like Cox Communications. The company blames the nearly two-month-long strike consisting of call center workers, installers and electricians during the spring, which led to a backlog of new installations. However, as The Consumerist noted, this backlog doesn't account for existing customers who decided to cancel their service.

"The current drop in Dish subscriptions is three times the number analysts predicted."

Meanwhile, as Business Insider reported, pay-TV subscriptions for Dish Network are also on the decline. In Q2 2016, the number of new Dish subscriptions decreased by 111,000 compared to the same quarter in 2015. Meanwhile, overall subscriptions were down 281,000 compared to last year, when they were only down 81,000. The current drop in subscriptions is three times the number analysts predicted.

The company was marketing its Sling TV skinny bundle package, a subscription business model that lowers prices but restricts the number of channels customers can view. Both satellite and cable companies alike believed the skinny bundle model would bring back higher subscription rates, but the strategy is failing to live up to expectations.

This is likely due to an increasing consumer preference for subscription video on demand as well as declining numbers of live TV viewership. Compared to 2014, American adults watch 18 fewer minutes of live TV per day - a decrease of 6 percent.

In addition, as The Consumerist noted, Dish has been involved in numerous carriage disputes which resulted in some customer losing channels like the NFL Network. These disputes have no doubt resulted in unsatisfied customers cancelling their subscriptions.

Online video continues to grow

Despite the recent drop in Netflix shares, the market for over-the-top video is still expected to expand over the next five years. For example, according to Digital TV Research, global revenues will rise to $64.8 billion by 2021 - over twice the $29.4 billion seen in 2015. Although the U.S. will remain the world leader in OTT video consumption, much of this growth will come from viewers in the Asia Pacific region, contributing $12.7 billion over time.

Even though OTT video and other forms of online content recently slowed in terms of growth, streaming video has effectively disrupted traditional television and is unlikely to disappear anytime soon.

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Vindicia Team

Vindicia Team

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