U.S. Pay TV Sector Has Biggest-Ever Quarterly Video Sub Decline (Study)

2012-29 BIZ Cable Cutter Illustration H IPAD

This analyst says adapting to match Netflix and Hulu with cheaper alternatives will fend off digital insurgents.

?Research firm SNL Kagan says the decline "elevates the specter of cord cutting."

The U.S. pay TV sector in the second quarter lost more than 600,000 video subscribers, its biggest quarterly drop ever, research firm SNL Kagan said.

The industry produced "the largest loss to date amid growing fears of cord cutting," the firm said, estimating it at around 625,000. The previous video sub loss record was set in the second quarter of 2011 with a 441,000 loss, followed by 394,000 in the second quarter of 2012, according to Kagan data.

The news comes as cord-cutting fears continue to rise amid a recent sharp drop in entertainment industry stocks and concerns about weak TV ratings and advertising.

SNL Kagan estimates that the U.S. cable, satellite TV and telecom companies' collective subscriber loss left the industry to end June with 100.4 million combined residential and commercial video subscribers. "The slide, which follows an uncharacteristically weak first quarter, points toward the likelihood of a much larger decline for full-year 2015 than the industry produced between 2010 and 2014, during what could essentially be seen as a period of general malaise," the firm said.

"The second-quarter crater was the product of a dramatic softening in the telco video sector, combined with an accelerated drop in (satellite TV) subscribers along with cable’s persistent decline," SNL Kagan explained. "While cable sub losses slowed, they remain by far the greatest source of downward pressure on multichannel subscriptions. Speculation swirls around the decline in Dish Network subscribers coinciding with the promotion of the provider’s alternative Sling TV OTT offering, but the estimated loss from Dish was compounded by a decline at DirecTV to drive the satellite total lower."