Q. I read your story about whether AT&T will shut down DIRECTV. I agree with you that it could happen because it keeps losing subscribers. But what about cable companies like Comcast? They are losing customers, too, so won’t they meet the same fate at some point? — Hank, Fairfax, Virginia.
Hank, I wrote a few days ago that AT&T plans to eventually close DIRECTV’s satellite service and go to an all-streaming TV business headed by AT&T TV. The switch won’t come soon, I believe, but it’s in the process. DIRECTV has lost nearly three million subscribers since AT&T purchased it in 2015 and the telco giant no longer believes that satellite TV is a viable business.
Cable TV operators such as Comcast and Charter are also losing video subscribers due to cord-cutting and other reasons. In fact, they’ve been losing them for a longer period of time than satellite. Comcast, for instance, has lost around four million video customers in the last 11 years, although the loss rate has slowed considerably in the last few years.
(DIRECTV and AT&T’s U-verse are losing subs now at a much faster rate; in the third quarter of 2019, the two services lost a net of 1.2 million customers combined while Comcast lost just 238,000 video subs.)
The major reason for the subscriber defections is the same as it is for satellite TV operators such as DIRECTV and Dish. Consumers are fed up with the pay TV services raising their bills every year, particularly with most annual increases exceeding the inflation rate.
While the pay TV ops have some justification in raising bills (programmers have dramatically raised their fees to carry their channels), the average consumer doesn’t care. He just sees those rising bills.
AT&T believes it can keep subscriber prices lower with the streaming model due to lower cost for infrastructure and related expenses. That in turn will slow subscriber losses, or so goes the theory.
So, you ask, will cable TV operators have to take this route, too?
Not necessarily. Cable companies, particularly the larger ones such as Comcast, Charter and Optimum, are in a different position because they also provide a indispensable little thing called the Internet. (Except in limited markets, the satellite TV operators do not provide Internet service.)
While consumers don’t like rising video prices, they are more likely to keep paying in the coming years because the cable ops bundle TV with Internet service. (The bundle usually is a good value because adding video to Internet service is less expensive than buying it separately.)
This gives the cable services more flexibility in determining how, when and if to switch to less expensive methods such as streaming. Sure, they will likely continue losing video subscribers, but the losses will be smaller than for DIRECTV, and the revenue loss will be offset by the rise in Internet revenue.
Bottom line: Cable TV companies are not dead, or even dying. They are just evolving.
Have a question about new TV technologies? Send it to The TV Answer Man at email@example.com. Please include your first name and hometown in your message.
— Phillip Swann