1. AT&T Brings Cord Cutting Realness

As you well know, we frequently mock the mainstream and Silicon Valley press for their references to the “massive wave of cord cutting” that exists only in their imaginations.

Back here in the real world, the pay TV industry lost less than 1% of its subscriber base  in 2018 (0.68% to be exact) as many MVPD defectors made their way to vMVPDs like Hulu Live TV and YouTube TV.

But AT&T.

Doing that phone company thing, they pushed a combination of confusing pricing plans, poorly designed interfaces and no less than five (WTF!) competing services: DirecTV, AT&T TV, AT&T TV Now, Uverse and AT&T Watch.

And unsurprisingly, they have shed 14% of their user base since Q3 2018.

That’s 1.36 million subscribers in Q3 2019 alone, and 3.6 million subscribers YOY, down from 25.2 million to 21.6 million.

That’s a whole lot of unsubscribers.

Why It Matters

Right now we don’t know where those subscribers went.

Did they go to vMVPDs, to other MVPDs or just cut the cord altogether? 

Chances are the correct answer is "all of them," which is why we'd kill to have the exact numbers, so we can learn whether there are there any similarities between the people who gave up pay TV altogether and whether they've cut the cord for good or if they're just waiting for the Flixcopalypse or the Super Bowl to weigh their options? 

It’s also important to note that while other MVPDs lost subscribers too, their losses were more in line with the slow steady trickle we’ve been seeing—Charter, for instance, lost 75 thousand of its 15.7 million subs (0.47% of them).

But 14%?

That’s a big ass number.

Now AT&T made all sorts of noise about how they were expecting this and how it’s part of their plan and all, which may well be true in that people are expecting their new ad-supported HBO Max will actually be a mashup of AT&T Now (the app formerly known as DirecTV Now) and HBO Max.

Or, as most people call it, a vMVPD.

And being AT&T they’re probably thinking that they’ll get all those million plus people back and then some by giving them good deals on Max and AT&T phones and 5G and all other sorts of price-centric goodies. Without having to actually make their plans less confusing or do anything about the interface.

But three and a half million subscribers is a whole lot of people to make up.

Our TV[R]EV theory is that actual cord cutting will indeed amp up once all the Flixes are up and running and people realize that they’re paying a lot of money for something they barely watch, and that the vMVPDs (and maybe even the MVPDs) will start offering low-priced super skinny bundles consisting of the broadcast networks only with add-ons available for 24-hour news and regional sports networks as a way to counteract cord cutting.

That said, we think you’re going to see attrition rates rise to somewhere around say 6% to 8% per annum for the next several years.

We also would not be surprised if in say ten years time, the broadcast networks stop actually broadcasting their linear feeds and run them on their OTT apps instead.

Now mind you this only happens in a world where their retrans deals become a lot less valuable than they are today, but that’s not out of the realm of possible given changing viewing habits.

What You Need To Do About It

If you’re an MVPD, you’ll want to do everything you can to make your subscribers happy and maybe start putting those super skinny bundles together now, rather than rolling them out in 2022 in what will clearly be seen as a defensive mood. 

That said, your main goal is to hold on to broadband customers, since that’s where you make your money, so keep that prize in sight.

And if you’re AT&T, well, you seem to have a plan. Here’s hoping you have a Plan B and a Plan C and maybe even a Plan D, as well.

And if you’re a research firm and you want to poll all those people who left AT&T to find out where they went? We’re all ears.

2. Will Anyone Notice If Walmart Sells Vudu?

The trades are all abuzz today about reports that Walmart might sell Vudu. 

That’s not a new brand of hard seltzer, but rather an app whose business model is primarily based on movie rentals or purchases. Yes, they’ve got a decent amount of FAST-style library content, but they doubled down on providing really good quality downloads of current movies for sale or rental to consumers who seem to have lost interest in those types of transactions..

Why It Matters

I’m old enough to remember when people thought iTunes and then Spotify would fail because the quality of MP3s and streaming audio tracks was not nearly as good as whatever came before it.

But convenience, so sorry film connoisseurs.

Vudu also had the misfortune to come out right at the time when the movie industry was shifting so that Netflix and Amazon had the movies people wanted to see (Roma) as part of their all-you-can-eat buffets and the general output from Hollywood slowed down to a mix of superhero movies and cartoons, few of which people were all that hard up to see.

Especially not when there was so much quality television to catch up on.

So there’s that and there’s the fact that they never tried to get deals with OEMs the way the FASTS like Pluto and Xumo and Tubi did, and then people sort of forgot about them and then the Flixcopalypse happened and now they’re kind of like the Go90 of OTT.

Someone asked me this morning who might buy them and the first thought that came to mind was private equity, because they’re kind of the repo men of the media world. Apple would be another one—it would give them some much needed library content, but Apple buying a company like Vudu is up there with pig flying.

So there’s that too.

I’ve seen some things about Jennifer Aniston’s Sweater style “shoppable programming” but that’s not going to happen either—no one wants to stop a show they’re watching to actually buy something (from Walmart no less) and the only way that works is for cooking and home shows where the program is essentially a 30 minute infomercial and you can buy the groceries from Whole Foods or Peapod at the end. (e.g., Discovery's recent well thought out Food Network Kitchen program.)

What You Need To Do About It

You could start a betting pool on what will happen to Vudu or take a poll of your non-industry friends and see how many have actually heard of it.

But mostly you just need to wait and occasionally check to see what happened, if anybody actually bought Vudu and if anyone, aside from a handful of cinephiles, actually notices.