Subscription video on demand services are growing

In March, it was reported that Netflix had become more popular than television among Millennials. Analytics firm Nielsen noted America’s largest consumer demographic prefers to stream television content rather than watch it at appointed times. A new Variety article notes how the popularity of cord cutting is impacting legacy pay-TV providers. In the first quarter of 2019, more than one million people canceled their cable and satellite television services.

The Q1 2019 contraction of the pay-TV market represents a major surge in U.S. cord cutting. Throughout 2018, only 3.2 million people ended their cable and satellite subscriptions. If this current trend continues, more than 40 million Americans will be without access to traditional paid television by year’s end.

Skinny Bundles Won’t Save Pay TV

For the last few years, legacy subscription TV providers have tried to mitigate their losses by offering cord cutters skinny bundles. Cable and satellite companies tried to appeal to cost-conscious consumers with low-priced streaming television packages. At first, the traditional provider’s strategy appeared to be working. In Q1 2018, AT&T Uverse/DirecTV lost 180,000 subscribers, but its DirecTV Now streaming service added 312,000 new members.

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Unfortunately, the pay-TV suppliers’ decision to increase their prices began to drive away their converted customers. In Q1 2019, AT&T’s traditional paid television services shed 544,000 subscribers. During the same frame, its DirecTV Now segment incurred 83,000 cancellations. Dish Network experienced a similar downturn in popularity. Its core product lost 266,000 paid users while its Sling TV service only added 7,000 new subscribers.

Legacy cable TV firms didn’t fare much better in the first three months of 2019. Comcast and Charter suffered 120,000 and 151,000 cancellations respectively from January to March. Verizon and Mediacom both shed 53,000 subscribers.

Pay TV’s Loss is Streaming Video’s Gain

While traditional pay-TV is entering the twilight of its existence, streaming video services are doing better than ever. Netflix has a subscriber base of 149 million, with 60 million subscribers in the United States alone. Hulu added 3.8 million new users in the first quarter, bringing its total number of users to 28 million. Additionally, it’s reported that Amazon Prime Video is watched by 26 million Americans.

Despite popular misconceptions, viewers aren’t cutting the cord to save money. An eMarketer study found consumers are subscribing to on-demand video platforms because of their quality original content. Indeed, streaming TV shows like “Black Mirror,” “Master of None,” and “The Handmaid’s Tale” have dominated the Emmys and Golden Globes for years now.

The increasing popularity of subscription video on demand (SVOD) services is also good news for Disney and Apple. The House of Mouse is launching its Disney Plus streaming platform later this year. The applications big appeal is that it will host Disney, Marvel, Pixar, Lucasfilm, and 20th Century Fox content. But the company is also debuting new series connected to its Marvel Cinematic Universe and “Star Wars” brands.

Apple is eschewing licensed content altogether with its forthcoming SVOD platform. The iPhone maker’s Apple TV+ will host new shows from Steven Spielberg, M. Night Shyamalan, and J.J. Abrams. If consumers enjoy the service’s new content, the firm will move much closer to its goal of evolving past being an electronics maker.

Once again, the tech sector has introduced positive and negative disruption into an established industry. While pay-TV corporations are on the last legs, the television medium has never been so robust.

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