Live streaming services were supposed to be a bright spot for the pay-TV industry, but they may be even less reliable than reported
- VMVPDs have been seen as a bright spot for the declining pay-TV industry.
- The reported subscriber numbers are suspected to be smaller and less reliable than previously thought, though.
- The figures are volatile because customers subscribe on a seasonal basis and signing up for free promotional packages, at a loss to distributors.
As viewers shift from traditional TV in favor of streaming services, traditional and new TV providers, like AT&T and Hulu, have developed virtual multichannel video programming distributor, or vMVPD, packages.
But nearly four years after Dish launched the first digital TV service with Sling TV, the still-tiny paying subscriber base of vMVPDs — about 7 million for the top six companies, based on their reported data — is even smaller and less reliable than reported, according to some analysts.
Companies report vMVPD subscriber figures selectively, and Hulu, YouTube TV, and Sony PlayStation Vue, three of the top five largest vMVPDs by subscribers, don't regularly report them, eMarketer analyst Paul Verna told Business Insider.
"My rule of thumb is that if they're not telling you the numbers, it means they're probably not great or there's not a lot of growth," Verna said.
VMVPDs often offer their services for free or at steep discounts but don't say how many of their subscribers are getting it for free. Giving away the service for free also threatens their long-term stability. AT&T for one lost about 17% of its DirecTV Now subscribers when it eliminated promotions.
There’s no way to know for certain how much vMVPD subscribers fluctuate between months, since companies don’t publicly share this data, but Dan Rayburn, a media analyst at Frost & Sullivan, estimates subscriber figures oscillate 20% a month.
Rayburn doesn't think live streaming services will be the death of linear pay TV.
"I remember when YouTube TV came out, people predicted it's going to 10 million subs in a year," Rayburn said, citing private research he's seen as an analyst on Wall Street. "It doesn't even have a million."
Below are the most recently reported subscriber figures for the top six vMVPDs, according teMarketer, using figures publicly reported by the companies. Not all of the top companies reported subscriber figures for all of 2018.
- Sling TV: 2.42 million as of February 2019
- DirecTV Now: 1.6 million as of January 30, 2019
- Hulu with Live TV: over 1 million as of September 2018
- YouTube TV: 800,000 as of July, 23 2018
- Sony PlayStation Vue: 750,000 as of Q2 2018
- FuboTV: approaching 250,000 as of September 2018
The subscriber figures are likely even smaller at any given point in time because there's a seasonal component to subscriptions. People might sign up to watch college basketball during March Madness, then cancel, Rayburn said. Rayburn said Hulu management has told him that its subscribers change plans often, which is why they don't share subscriber figures every quarter.
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These businesses all operate at a loss, so vMVPDs will have to raise prices, Verna said.
Some providers are already pulling back on aggressive promotions, which will likely cost them in subscribers.
Case in point: AT&T ended its $10-a-month promotion for DirecTV Now in the fourth quarter of 2018. Management said the end of such offerings contributed to the loss of 267,000 DirecTV Now customers, some of its worst subscriber losses in its history.