The global outbreak of the Novel Coronavirus (COVID19) left the whole world in a standstill. Life literally stopped but the time had no such plans. People were made to adjust to a new lifestyle which they were never comfortable with. Staying inside, practicing social distancing, working from home, and adopting a lot more hygienic habits, made people to drastically change the way they lead their life. The US cable TV industry was not an alien to this massive shift. In fact, the pandemic came just at the wrong time because the US cable TV industry was already facing numerous challenges. The economic downturn, which was a result of the pandemic, further aggravated the situation for the US cable TV service providers.
The Unprecedented Times
According to a report, the number of households cutting the cord jumped to an all-time high in the history of the United States of America in the first quarter of the Year 2020. During the first quarter, as many as 1.8 million people cancelled their Pay-TV service. The economic downturn further intensified the losses for the US cable TV providers as the average monthly cable bill was calculated at $217.42 and the pandemic forced over 40 million Americans to apply for unemployment insurance.
The Nightmare Continues
According to a forecast by Kagan, the US households are likely to continue cutting the cord because of the pandemic and the economic downturn. The Kagan predicted a decline of around 11 percent in 2020 alone. In a Variety interview, Craig Moffett from Moffett Nathanson reported that the Pay-TV penetration in the US currently stands at 63% of households, which is the lowest percentage in more than 25 years.
And the nightmare continues! The Virtual MVPDs (vMPVD) saw subscribers getting contracted for the first time since inception. All this is happening despite the low-cost bundles and meager monthly cost. The S&P Global Market Intelligence revealed in a report that the number of vMPVD subscribers fell by 261k during the quarter.
Respite for Hulu, YouTube TV
While Sling TV and AT&T T reported decline in their subscriber base, Hulu with Live TV and YouTube TV saw their users increase during the period. Moreover, TV Now, combined with Sony, is closing down its PlayStation Vue service. According to a report, the total number of vMVPDs stood at 9.2 million at the end of the first quarter of the Year 2020.
New Streaming Services Making Their Way
There seems to be no stopover for threats to cable TV industry. The advent of new streaming video providers like Netflix has totally changed the game. Netflix had 69.9 million subscribers in the US and Canada by the end of the first quarter. Out of these 69.9 million, 2.3 million were added in just the first quarter. DisneyPlus was launched in November last year and it has skyrocketed to 54.5 million subscribers by early May this year. Similarly, Hulu added around 7 million subscribers to its base in a year, thereby taking the total number of subscribers to 32.1 million globally.
While the world was dealing with the pandemic, two new streaming services made their debut. These were Quibi and AT&T’s HBO Max. Quibi was rolled out on April 6, and after a sluggish debut, it has reached to 1.3 million active subscribers. Similarly, HBO Max made its debut on May 27 with more than 10,000 hours of quality content. Comcast also rolled out its Peacock on July 15.
Let’s recap some of the leading factors hampering growth for cable TV service providers.
- Cord Cutting
- Competition from Streaming Video Services
- Rise in Unemployment
- No Live Sporting Events
News, sports, and discovery channels continued to keep their fans glued to the TV screens during the pandemic.
NEWS: Appetite Never Ends
Getting the latest news is something that matters a lot for an average American. This endless appetite for news made Fox News, MSNBC, and CNN the top three news providers across the US during the pandemic period.
Fox News led the pack and was declared the best-rated cable network with an average of around 3.56 million viewers. It was a 49% increase over the last year.
MSNBC followed next with an average of around 1.97 million viewers. It posted a 19% growth on annual comparison.
CNN was the surprise package during the pandemic. The Cable News Network grew its audience by 125% in April-May over the last year with an average of 1.72 million viewers.
SPORTS: Feeling the Heat
TNT was clearly on the receiving end during the pandemic period, mainly because of the fact that it overly relied on sports events. The channel typically televises NBA post-season high-profile games in the second quarter. However, the NBA decided to postpone the post-season, which had a negative impact on TNT’s viewership. The channel’s average audience in primetime slumped by 63% to 753,000 viewers. Only a year ago in May, TNT was the best-rated cable network with an average of 2.5 million primetime viewers. This year, it was languishing at the 13th rank in May.
DISCOVERY: An Upswing in Ratings
The infotainment sector seems to have found a stronghold in ratings since the rise of the COVID-19. Unlike many other segments of channels, a few Discovery-owned networks have reported increased viewership during the period. TLC, for example, expanded its viewership by 49% in April-May this year as against the same period of last year. It is only one of the two non-news networks to have an average viewership (1.23 million) of more than 1 million. The other one was HGTV, which improved its viewership by 5% to 1.25 million. HGTV was the fourth in the list of the channels with the best viewership. Similarly, Food Network has also reported a 12% increase in its primetime viewership which stood at 885,000.
The Final Word
The rise of cord-cutting and streaming video services was already evident before the global outbreak of the Novel Coronavirus. However, the pandemic has further intensified the growth and contraction of certain sectors, as discussed above. However, things will change a lot once the live sporting events make a return, which would give a breathing space to many cable TV service providers.
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