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US pay TV down almost 400,000 in Q3

US pay TV numbers continue to decline, with the smaller operators bearing the brunt of the losses.

The overall rate of cord-cutting slowed in the most recent, third, quarter, with a cumulative loss of 393,000 across US pay TV, according to research house Ampere Analysis. That compares with 608,000 in the previous three month and was calculated after AT&T restated its figures following its deal for DirecTV.

Analysing the subscriber trends, Ampere repotted that the larger pay TV companies are starting to stabilise and staunch the subscriber losses. The smaller operators and IPTV firms, meanwhile, are suffering.

“IPTV operators, which had offered the only bright spot in the US pay TV market, seem to be heading for a fall,” Ampere said in a blog post. “The rate of growth for Verizon’s FiOS has slowed noticeably, while AT&T’s U-verse suffered its first ever pay TV decline in the quarter.”

Ampere added that satellite platforms are also starting to feel the effects of cord-cutting although the cable companies are still losing subs at a faster rate. It concluded that while the rate of pay TV subscriber decline is slowing, there are still a large number of pay customers churning and an underlying cause for concern.

“While the official number of a decline of 393,000 is an improvement over recent quarters it masks an inescapable fact: re-report or not, 1,128,000 pay TV customers that had ‘existed’ in Q2 2015 have disappeared from the market,” it noted.

Analysts at Ovum highlighted the price difference between OTT and traditional pay TV. Adam Thomas, the research house’s lead analyst, Global TV Markets, told TBI: “With penetration around the 80% mark there is very little scope for new subscribers, so losses are no longer being offset by new clients. Secondly, US pay-TV services are notoriously expensive, something that has long raised questions over value-for-money.

“This environment has created an opportunity that OTT video has successfully exploited, which has put pay-TV subscriptions into a downward spiral that is proving difficult to reverse. In simple terms, OTT has made traditional pay-TV look bad, starkly highlighting it as too expensive and one size-fits-all.”

Ovum, however, sounded a positive note. Thomas said: “But the pay-TV model is not beyond repair and requires some readjustment rather than a total reinvention. There are already some positive signs. Verizon’s new Custom TV service, for example, offers multiple themed channel packs which offer customers more choice and flexibility and moves the market a little closer towards the long-standing consumer desire for a la carte pricing.”

Tags: Ampere, DirecTV, FiOS