Live Channels Not Part of Many Households' Streaming Strategies
Streaming video entertainment grows more popular each quarter, but will live channels be a part of the platform's future? In a research letter, MoffettNathanson senior analyst Craig Moffett examines the numbers and declares "live is dead," before adding a few caveats.
In the post-pay TV world consumers were supposed to slide from cable and satellite subscriptions to vMVPD accounts that offered a limited set of live channels for lower prices. But, Moffett notes, the conversion rate for households doing that is low. Over the last 12 months, only 40% of those dropping pay TV then signed up for an vMVPD.
That means many people have dropped live services. Moffett estimates 15 million households have currently abandoned live TV. The most popular vMVPD seems to be Hulu Live (2.7 million), followed by Sling TV.
What of AT&T TV Now, one of the best known live options? Moffett says price hikes, which had some people going from $35 monthly bills to $85 monthly bills in three years, have led to high churn rates. The service has now seen four consecutive quarters of steep subscriber declines.
While this all spells bad times for live streaming, Moffett points out that there is a dual reality for live streamed programming, one for entertainment and another for sports and news. Live sports, especially, has an appeal for streamers, but as people leave MVPDs and vMVPDs, sports licensing costs per viewer rise.
"Ratings data clearly supports the divergence hypothesis. Today, live viewing of sports and news (especially sports) remains healthy, while viewership for all other programming has declined," Moffett writes. However, "the feedback loops about which we’ve written so much over the past year—declining subscribership that will force faster affiliate fee increases, especially for sports networks, which in turn will accelerate subscribership declines, which increasingly drive a wedge between sports and general entertainment—are gathering momentum."
That points to a rough future for live sports streaming, with high costs and a small group of households paying for content, but an even rougher one for live entertainment channels, where households will simply abandon pay TV and vMVPD options for lower-priced on-demand services.
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