DirecTV Now, Sling TV and other vMVPDs should brace for slower growth, analyst says

DirecTV Now and Sling TV have already seen their subscriber growth stall or reverse in recent quarters and now the virtual MVPD space in general could be facing a slowdown.

The new UBS Evidence Lab Streaming TV App Monitor estimates that streaming TV subscribers totaled 8.6 million overall, or approximately 9% of total video subscribers. By 2022, the firm expects streaming TV subscribers will make up about 20% of the total video market.

“While growth in streaming TV has helped stabilize video market declines in recent years, we expect streaming TV growth to slow with the recent price increases and a greater focus on profitability. Along with worsening traditional losses, we expect total video subs to fall 3.4% in 2Q, accelerating from -2.3% in 1Q and +0.2% this time last year,” wrote UBS analyst John Hodulik in a research note.

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UBS is basing its predictions for slower vMVPD subscriber growth on its streaming TV spend tracker data, which follows credit card transactions. The firm’s data displayed decelerating growth in brand incidence, which UBS uses as a proxy for predicting subscriber growth. For YouTube TV, DirecTV Now, Sling TV, FuboTV and Philo, the company said brand incidence totaled 20%, down from 28% in the previous quarter. But, the average amount spent per transaction increased for all the major vMVPDs.

Another metric that UBS tracks to estimate vMVPD subscriber growth is app downloads, and the firm found that YouTube TV was seeing more momentum after capturing 42% of streaming TV app downloads during the most recent quarter. DirecTV Now’s download share stayed stable amid price increases and promotional pricing pullback, Sling TV’s share held steady and AT&T’s Watch TV jumped from 7% to 9%. PlayStation Vue’s downloads share fell the furthest, from 9% last quarter to 3%.