For now, according to equity analyst Craig Moffett’s latest quarterly “Cord Cutting Monitor,” the terminal decay of the U.S. pay TV business appears to have, at least slightly and temporarily, stabilized, with the YoY rate of erosion in the third quarter tallying in at 6.6%, down from 6.8% in Q3 2023.
That said, the firm was sure to point out that “the rate of decline is still incredibly rapid, particularly for traditional distributors,” but still acknowledged that Q3 was a little improved compared to both recent trends and the year prior. By Moffett estimates, the pay TV industry, including both virtual MVPDs and traditional providers, collectively lost “just” 305,000 subscribers in Q3.
But in his new report, which is subtitled “Cable’s Last Stand,” Moffett sees even greener shoots down the road in 2025 with the emergence of Charter’s “Life Unlimited” bundling strategy for video. Charter outlined it during its Q3 earnings call back on Nov. 1: Following its landmark program licensing renewal with Disney in September 2023, Charter subsequently demanded free-to-subscriber carriage rights for major SVOD services with each new program licensing negotiation it entered into, including talks with Warner Bros. Discovery, Paramount Global and NBCUniversal.
Now, with ad-supported iterations of these major streaming services infused into its pay TV product, Charter has returned video to its primary bundled offering. It’s selling video attached to mobile and home internet in its new flagship “Life Unlimited”-branded package, after the video product had previously been, in Moffett’s words, “left for dead.”
Remember, video used to be the lynchpin of cable’s old “triple-play,” sold alongside home internet and landline telephone service. But video in relatively more recent years had disappeared from the bundle, when cable operators stopped making money on pay TV.
“It’s too early to judge whether Charter’s strategy will succeed; the full implementation of the idea won’t be available to customers for another few months. But there’s good reason to believe it just might work. Charter’s video offering may now be the cheapest alternative out there,” he added.
Not only is Charter bundling live channels with ad-supported iterations of major streaming services, it also allows consumers to stream their video service on the go and replaces the traditionally cumbersome living room set-top with a more elegant Xumo streaming puck.
Will it meaningfully impact cord-cutting? Again, tough to say.
More specifically, Moffett sees Charter’s innovative offering as a hedge against YouTube TV, which added what he estimates was around 800,000 subscribers in the third quarter, putting the Google pay TV service at around 9 million customers and on a trajectory to surpass No. 1 Charter and No. 2 Comcast in the next few years.
With YouTube TV increasing its price by 14% last month to $82.99 a month, Moffett believes Charter has a chance to disrupt the Google-owned virtual MVPD platform's momentum and reclaim lost market share.
“Charter’s video offering, particularly when bundled with broadband (and even more so when bundled with mobile) is arguably the best deal in the industry, especially for relatively heavy video consumers who take more than one streaming service (beyond Netflix) in addition to linear TV,” Moffett said.