1. AT&T Loses Over 1M Subs In Q4

AT&T racked up some impressive TV subscriber losses in 2019, shedding 945K DirecTV and U-verse subs along with 219K AT&T TV Now subs for a grand total of 1.164M subs in Q4 alone.

Over the full year, AT&T lost 3.43 million MVPD subs, a net loss of 15% of its subscriber base. The AT&T Now vMVPD (fka DirecTV Now) got hit even harder, losing 665,000 subs, or 42% of its total subscriber base.

Why it matters

On a macro level, cord cutting is moving from something a few people are doing to something a lot more people are doing.

And while it would be interesting to see some stats on what all those former AT&T subs did once they got rid of AT&T, let's assume a goodly number of them left v/MVPD TV for good.

Which is a big story in and of itself, but at some level, the bigger story here is that customer experience matters.

A lot.

AT&T did a whole lot of things that seemed to piss people off, from changing out the set-top boxes to changing the names of the services and shuffling around their various plans often without warning. (There were at least five different pay TV offerings, each with confusing multi-tier offerings.)

At a time when Hulu with Live TV was unveiling a modern-looking, library-based interface, AT&T’s interfaces felt stodgy and stuck in the past.

The plans were often confusing and it was hard to tell how the multiple services were actually different from one another.

With all these knocks, it’s no wonder so many users reported they felt as if AT&T didn’t value them and didn’t really want their business.

Which mattered a whole lot for AT&T, since a sizable portion of their subscriber base signed up to take advantage of the deep discounts they were offering.

Good customer service could have allowed them to keep many of those customers rather than drive them away the minute their contract was up.

And here’s why that really matters: as the Flixcopalypse continues and consumers are presented with a wide array of Flixes and FASTS (free ad-supported streaming TV services) along with vMVPDs and MVPDs, things like interface and customer support and just a general feeling of “these people value my business” is going to matter a lot more.

Comcast, for example, whose slick Xfinity interface makes it seem like they might actually care about their customers, only lost 733,000 video subs in 2019, or just 3.3% of their total subscriber base.

Small victories.

So while the actual programming will always be first and foremost in the decision on which services to subscribe to, viewers will be more likely to hang on to a service that has a great, user-friendly interface, easy to understand pricing and a solid tech stack over one with a confusing interface that buffers and crashes on a regular basis. (And don’t get me started on customer service that features endless wait times on phone chains.)

Since reducing churn is going to be a major concern over the next few years, that’s something every distributor needs to be concerned about.

What you need to do about it

If you are any sort of distributor of TV programming, remember that at many levels you are basically a retailer.

And in retail, there are only three things that matter: price, selection and service.

Your selection will be your programming, and if you’re a distributor it’s probably not going to be much different than anyone else’s.

Which leaves you with price and service.

Price can bring people in the door, but it’s not going to keep them there. Especially in an industry where “service”—which can be anything from the quality of the interface to the ease of signing up and paying—varies so wildly.

Meaning that while you may be able to draw people in with the notion that a specific service (HBO Max, Peacock, Hulu) will be free for subscribers, or by giving them a very low upfront price (looking at you AT&T), ultimately it is going to be the level of service you offer that winds up keeping them there.

Caveat venditor.

2. Facebook Cutting Back On Originals

Facebook appears to be cutting back on the amount it is spending on original programming for Facebook Watch, focusing instead on buying clips of existing programming and producing low-priced talk shows.

Why it matters

This is not all that surprising given how few people actually seem aware that Facebook Watch even exists. (The question of why Facebook never did a full-on rollout in one of their weekly app updates with a “Welcome to Watch” splash page and “Let’s pick out some shows for you to subscribe to” follow-through is baffling, but then again so is Zuckerberg’s refusal to take down political ads containing blatant falsehoods.)

There’s also the issue of How Do You Get Your Users To Watch Programming Aimed At Millennials When Most Of Them Are Boomers?

Mostly though, this seems like a smart move by Facebook whose stated goal is to increase the amount of time people spend on the platform. And watching a short clip of last night’s Clippers-Nets game or Conan’s opening monologue seems very much in keeping with what people do on Facebook. Ditto a three to five minute segment of a C-list celebrity’s talk show.

Now the other goal of course, is to sell ads, and it’s unclear if users are going to want to watch the aforementioned clips badly enough to actually sit through ads, especially when, unlike YouTube, there’s no quick and easy “Skip Ads” button that shows up within the first few seconds.

Still, it’s a sign that Facebook is starting to come to terms with reality about Watch and what it can and can’t do for them.

It’s our opinion that Facebook (the app, not the company) is like a slow-leaking balloon—it’s not going to go under anytime soon, but it’s going to slowly lose momentum and eventually start to contract. But for the next five years, making Watch a “here’s some short clips of what you missed on TV” repository is not a bad idea. Especially if they can get users to start sharing those clips more readily.

What you need to do about it

If you’re Facebook, you seem to be on the right track. Strike more deals for the sorts of things people are likely to share, be aware that few people under the age of 25 admit to using the app, which doesn’t really matter because you’ve got them on Instagram anyway, but just make sure your Watch choices appeal to the older demo that is your bread and butter.

If you’re a TV network, sports league or other programmer, Facebook is a great place to distribute your more easily shared content—highlights clips, talk show clips, scenes from next week, short interviews with actors. Extra points if you write up a little caption that explains what the user is going to watch. (So often programmers seem to forget that.)

If you’re Quibi…this could be really bad news (no one wants to watch Shows You Have To Pay Attention To on mobile) or it could be really good news (no one else is doing what you want to do). My suspicion is that it’s the former, but worst case is you can take all those shows, launch a Roku channel, and roll them out as two hour movie-like objects. With ads.