Cord cutting is a term that has been used for quite a few years now. It mostly refers to those that are leaving traditional cable companies for a streaming service like Netflix, Hulu, DIRECTV NOW, Sling TV, YouTube TV or PlayStation Vue. However lately, more and more people are cutting that cord. And according to analysts at MoffettNathanson, there are more cord cutters than ever before. In the last quarter, around 941,000 subscribers cut the cord, that's up from 809,000 a year ago. MoffettNathanson also noted that the "rate of pay TV subscriber erosion worsened, rising sequentially from 2.5 percent last quarter to 2.7 percent in the second quarter, the fastest rate of decline on record."
This is affecting all cable companies, as you would expect, and it's continuing in the third quarter as Comcast, Charger, Dish Network and AT&T are all seeing their shares drop in the first week of August. This shows that Wall Street is also a bit spooked by the vanishing subscribers. However, this also shows why companies like AT&T and Comcast are investing in a streaming service, in an attempt to bring in customers to offset the ones leaving, or at least keep those current subscribers. However, with more streaming services popping up, it's becoming more and more difficult to offset those subscribers that are vanishing.
One might wonder how streaming services like DIRECTV NOW is struggling against others like Sling TV or PlayStation Vue. Well it's quite simple. With traditional cable, you only have one or two competitors in any particular part of the country. But with these streaming services, there are virtually no limits. For instance, Sling TV is available around the country, the only limits are the local channels, which these streaming companies are getting on board pretty quickly these days. So there's more competition popping up, making it tougher for traditional cable companies that are evolving into streaming services to compete. And it's only going to get worse, seeing as Comcast is planning to offer its own streaming service, which has not yet launched, and there are likely others on the horizon as well. The third quarter isn't looking too good for these cable companies either, and they could see an even higher percentage of subscribers leaving.