The weak economy is hitting Americans where they spend a lot of their free time: in front of the TV set.
They’re canceling or forgoing cable and satellite TV subscriptions in record numbers, according to an analysis by the Associated Press (AP) of the companies’ quarterly earnings reports.
The US subscription TV industry first showed a small net loss of subscribers a year ago. This year, that trickle has turned into a stream. The chief cause appears to be persistently high unemployment and a housing market that has many people living with their parents, reducing the need for a separate cable bill.
Photo: AFP
However, it’s also possible that people are canceling cable, or never signing up in the first place, because they’re watching cheap Internet video. Such a threat has been hanging over the industry. If that’s the case, viewers can expect more restrictions on online video, as TV companies and Hollywood studios try to make sure that they get paid for what they produce.
In a tally by the AP, eight of the nine largest subscription TV providers in the US lost 195,700 subscribers in the April-to-June quarter.
That’s the first quarterly loss for the group, which serves about 70 percent of households. The loss amounts to 0.2 percent of their 83.2 million video subscribers.
The group includes four of the five biggest cable companies, which have been losing subscribers for years. It also includes phone companies Verizon Communications Inc and AT&T Inc and satellite broadcasters DirecTV Group Inc and Dish Network Corp. These four have been poaching customers from cable, making up for cable-company losses — until now.
The phone companies kept adding subscribers in the second quarter, but Dish lost 135,000. DirecTV gained a small number, so combined, the US satellite broadcasters lost subscribers in the quarter — a first for the industry.
The AP’s tally excludes Cox Communications, the third--largest cable company, and a bevy of smaller cable companies. Cox is privately held and does not disclose subscriber numbers.
Sanford Bernstein analyst Craig Moffett estimates that the subscription-TV industry, including the untallied cable companies, lost 380,000 subscribers in the quarter. That’s about one out of every 300 US households and more than twice the losses in the second quarter of last year. Ian Olgeirson at SNL Kagan puts the number even higher, at 425,000 to 450,000 lost subscribers.
Dish CEO Joe Clayton told analysts on a conference call on Tuesday that the industry is “increasingly saturated.”
However, like other industry executives, Clayton sees renewed growth around the corner. Though his company saw the biggest increase in subscriber flight compared with a year ago, he blamed much of that on a strategic pullback in advertising, which will be reversed before the end of the year.
Other executives gave few indications that the industry has hit a wall. For most of the big companies, the slowdown is slight, hardly noticeable except when looking across all of them. Nor do they believe Internet video is what’s causing people to leave.
Olgeirson said the people canceling subscriptions, or never signing up, are an elusive group, difficult to count. Yet he believes the trend is real and he calls it the “elephant in the room” for the industry.
Anecdotal evidence suggests that young, educated people who are not interested in live programs such as sports are finding it easier to go without cable. Video-streaming sites like netflix.com and hulu.com are helping, as they run many popular TV shows for free, sometimes the day after they air on television.
In June, Nielsen Co said it found that people in the US who watch the most video online tend to watch less TV.
Olgeirson expects programmers to keep tightening access to shows and movies online. A few years ago, Olgeirson said, “they threw open the doors,” figuring they’d make money from ads accompanying online video as well as traditional sources such as the fees they charge cable companies to carry their channels. However, if it looks as if online video might endanger revenue from cable, which is still far larger, they’ll pull back.
Already, News Corp’s Fox broadcasting company is delaying reruns on Hulu by a week unless the viewer pays a US$8 a month subscription for Hulu Plus or subscribes to Dish’s satellite TV service.
Moffett believes it’s hard to separate the effect of the economy from that of Internet video. Subscription TV providers keep raising rates because content providers such as Hollywood studios and sports leagues demand ever higher prices. That’s causing a collision with the economic realities of US households.
“Rising prices for pay TV, coupled with growing availability of lower cost alternatives, add to a toxic mix at a time when disposable income isn’t growing,” Moffett said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day