AT&T’s US pay-TV subscribers continue to fall
During the last few quarters, AT&T (T) has been experiencing subscriber losses in the traditional US pay-TV market. Wall Street analysts foresee a net loss of traditional US pay-TV subscribers for AT&T in 3Q17, as the telecom company continued to face intense competition from cable and OTT (over-the-top) video streaming firms.
AT&T’s management anticipates nearly 300,000 DIRECTV Now net subscriber additions with total US video customers down about 90,000 in 3Q17, which implies a net loss of 390,000 US pay-TV customers. The management attributed the lower total video net additions to greater competition in traditional US pay-TV markets and OTT services, hurricanes, and severe credit standards.
Pay-TV providers losing subscribers
Earlier in 2Q17, AT&T lost 156,000 DIRECTV satellite video subscribers as well as 195,000 U-verse video subscribers, which implies a net loss of 351,000 US pay-TV customers mainly due to the rapid growth in the OTT video viewing trends and competitive promotional offers.
OTT video streaming services deliver content directly to users over the Internet in place of signing up for the cable or satellite connection. Thus, OTT services slow pay-TV subscriber momentum due to cheaper online alternatives. This phenomenon is known as “cutting the cord.” DISH’s (DISH) Sling TV, Sony’s (SNE) PlayStation Vue, and Netflix (NFLX) are the leading firms in the online video streaming market.
Additionally, the introduction of AT&T’s OTT video service in 4Q16 would help the telecom company to offset the subscriber losses that it is experiencing in the traditional US pay-TV market.