There were not too many--if any surprises--in the latest Leichtman Research Group survey of the U.S. linear TV business. The second quarter of 2016 showed net subscriber losses, but that is consistent with the trends of the last several years.
Some might point to the magnitude of the net losses--665,000 net video subscribers--compared to 545,000 subscribers in the same quarter of 2015.
But the second quarter always is the worst quarter of the year, and the magnitude of those losses could decline for the next three quarters. And most of that came from losses of AT&T U-verse accounts.
Statistically, a loss of 665,000 customers represents about seven-tenths of one percent. Perhaps not pleasant for linear video service providers, but hardly a jarring loss.
On an annualized basis, if continued at the same rate, that would work out to about three percent annually. That would be historically high for any one-year period. And, granted, at that high rate, it wouldn’t take long for the industry to lose most of its business over a decade or so.
And that is what observers will be watching.
Fixed network voice accounts supplied by incumbent telcos (cable TV companies have gained accounts) have fallen far faster than that over the last couple of decades.
From 2000 to 2015, incumbent telcos lost about 70 percent of switched access lines and 79 percent of switched retail residential access lines.
From 2006 to 2011, U.S. fixed voice lines fell from about 139 million to 89 million, a drop of 50 million lines, or about 36 percent, or roughly seven percent a year.
From 2010 to 2015, voice lines fell at a slower rate, from about 153 million to 135 million, a loss of 18 million lines, or about 12 percent over five years, or perhaps 2.4 percent annually.
If past is prologue, the steep period of losses of linear video accounts has yet to begin.
Linear Video Subscribers, Second Quarter, 2016
Other major private company***
Total Top Cable
Satellite TV Companies (DBS)
Total Top Phone
Total Top Pay-TV Providers
Source: Leichtman Research Group