1. Q2 Numbers Reveal Pay TV Subs May Have Risen

So Leichtman Research Group, which uses the actual subscriber numbers supplied by the MVPDs (they are public companies so the numbers aren't guesses) to determine what’s happening with cord cutting, released their latest compilation and things are (once again) not so grim and possibly even a bit rosy.

Why It Matters

You can read all the details here, but top line: the largest MVPDs, which make up around 95% of pay TV subscribers, lost around 800,000 viewers in Q2 2018, or around .087% of their total user base.

That was offset by the 383,000 viewers that Sling and DirectTV Now added, bringing the overall loss to 417,000 or 0.45% of all pay-TV subscribers.

But wait! There’s more!

Leichtman only counts vMVPD numbers from the two public companies that release their data in earnings calls. That means they don’t count vMVPDs like Hulu Live TV, YouTube TV, Fubo TV, and Sony Playstation Vue.

Given that Hulu’s subscriber count went from around 450K in January to 800K at the end of April, it would not be unreasonable to assume that both Hulu Live TV and YouTube TV added around 200K subscribers in Q2. Add in another 50K subscribers each from FuboTV and Sony Playstation Vue, and you have 500K new vMVPD subs on top of the 383K from Sling and DTVN, which means that pay TV subscriptions may actually have grown this quarter, by around 83K subs.

What You Need To Do About It

Granted vMVPDs are not a 1:1 match in terms of business model, but if you’re a network … break out the champagne!  Networks are allegedly making more money from vMVPDs than from MVPDs as they charge higher carriage fees, and they get to reach younger viewers with the same linear programming and same ad load.

If you’re an MVPD, time to figure out your vMVPD strategy—we’re still puzzled as to why the MVPDs don’t turn their TV Everywhere interfaces into vMVPDs rather than cutting deals with YouTube TV, et al, but, if we’re being generous, we figure it has something to do with costs, e.g., they will lose money on a vMVPD since carriage fees are so high, plus they’re afraid of cannibalizing their existing MVPD business. Regardless, it's time to figure out a strategy.

 

2. Xumo TV Grows By 325%

Ad supported OTT (AVOD) is TV’s new new thing right now and Xumo TV, one of the larger AVOD networks announced that they’d seen a 325% rise in viewership and a 90% increase in user consumption.  (We’re assuming that “viewership” means total number of uniques, while “consumption” means time spent on the platform.)

Why It Matters

That’s very much in line with what we’ve been hearing anecdotally from companies like Beachfront Media who deal in OTT advertising.

Xumo, along with Pluto, Tubi and Roku, is one of the largest ad-supported OTT networks, and that category has been seeing explosive growth as viewers discover that these networks offer both old favorites and new originals for free, with significantly lower ad loads than traditional TV.

It will be interested to see how much of that viewing is a replacement for traditional TV and subscription VOD services and how much is additive, but either way, ad supported OTT, and the targeting opportunities it creates (it’s all addressable) is booming.

What You Need To Do About It

If you’re an advertiser, this is a great way to explore addressable TV advertising and to experiment, so that you can learn what works and what doesn’t work in time for the larger addressable explosion that's likely to happen in the next three years or so.

If you’re an MVPD or vMVPD, you might want to talk to Xumo and other AVOD networks about adding them to your service, the way Comcast has done with Netflix and Amazon. Seems like it would be a win all around—they get more viewers, you get more stickiness, everyone goes home happy.