• Market Crumbs

Consumers Continue To Cut The Cord


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With people confined to their homes as a result of COVID-19, there's not a whole lot to do besides binge-watch television shows. With plenty of time to catch up on shows, viewership of classics such as The Sopranos has jumped 179%.


In the case of The Sopranos, the large spike in interest could be attributed to HBO's decision to offer its library of content for free ahead of this month's launch of HBO Max.


The move by HBO is the latest example of how content providers are trying to lure consumers to their streaming services and away from traditional cable and satellite TV.


According to MoffettNathanson, the first quarter saw 1.8 million consumers drop their pay-TV subscriptions. The decline represents a 7.6% annualized rate, which is the fastest decline in pay-TV subscribers ever recorded.


"At 63% of occupied households, traditional pay TV penetration has reached a level not previously seen since roughly 1995," analyst Craig Moffett wrote in a report. "There are now as many non-subscribing households (46M) as there were pay TV subscribers in 1988."


Satellite TV was hit particularly hard in the first quarter with AT&T losing one million subscribers, mostly from DirecTV. Dish Network lost 413,000 subscribers during the first quarter, the company's largest quarterly decline on record.


Internet delivered "virtual" TV providers also showed a net decline during the first quarter. AT&T TV Now, Dish's Sling TV, Hulu + Live TV, YouTube TV and FuboTV lost more than 300,000 subscribers combined.


One of the reasons the first quarter may have seen a record-setting decline in subscriptions is likely the result of sports being cancelled. A survey from The Trade Desk found that 60% of Americans say watching live sports is the primary reason they have kept their cable TV subscriptions.


With many networks locked in to lucrative sports broadcasting contracts, we've seen deals that years ago would've seemed highly improbable such as the NFL striking a deal with Amazon to stream games.


With virtually every company launching some sort of streaming service, the future may mean less profits for the industry as a whole, according to Moffett.


"Notwithstanding the princely valuations being accorded SVOD platforms like Disney+, we doubt the DTC lifeboats will ever come close to matching the profitability of the business they are ostensibly designed to replace."


While traditional cable and satellite TV continues to struggle, Netflix added nearly 16 million subscribers last quarter, bringing the company's total subscriber count to nearly 200 million globally.


As people continue cord-cutting at a record rate, it will certainly be interesting to watch the industry continue to fight each other in the coming years.


Leftover Crumbs

  • China pulls back on U.S. investment. Chinese direct investment in the United States fell to the lowest level since 2009 last year, according to a report from research firm Rhodium Group and the National Committee on U.S.-China Relations. This year appears to be getting worse as the first few months of 2020 saw just $200 million in newly announced direct investments compared to an average $2 billion per quarter last year. "Our two countries are still far from decoupled, but the trend lines are not pointing in the right direction," president of the National Committee on U.S.-China Relations Stephen Orlins said.

  • Abbott Labs' antibody test is on the way. The U.S. Food and Drug Administration has granted emergency use authorization to Abbott Laboratories' COVID-19 antibodies test. The company expects to ship nearly 30 million tests this month, with the capacity to ship 60 million tests in June. "Having more options of highly reliable tests across our platforms will help healthcare workers and health officials as they conduct broad scale testing for COVID-19," Abbott Laboratories CEO Robert Ford said.

  • Apple heading to India? Senior executives at Apple have reportedly met with Indian government officials to discuss plans to bring nearly a fifth of its production capacity from China to India. The plan, which could see Apple produce $40 billion worth of iPhones over the next five years, would make Apple India's largest exporter. "India isn’t a big market for Apple as the company sells only a fraction of its total output in India. It is actually looking at India as a base to manufacture and export, essentially diversifying its production out of China," an Indian official said.

  • Paul Tudor Jones loves bitcoin. Hedge fund manager Paul Tudor Jones is betting on bitcoin, saying we're witnessing the "birthing of a store of value." "It’s a great speculation. I’ve just got something ... just over 1% of my assets in bitcoin. Maybe it’s almost 2. That seems like the right number right now," Jones said. "Every day that goes by that bitcoin survives, the trust in it will go up." When discussing cash, Jones said "you have, in essence, a wasting asset in your hands."

  • Branson trimming Virgin Galactic stake. Virgin Group founder Sir Richard Branson intends to sell $504.5 million worth, or just under 22%, of his Virgin Galactic Stake. Branson will use the proceeds for Virgin Group's "portfolio of global leisure, holiday and travel businesses that have been affected by the unprecedented impact of COVID-19." The sales will be made "from time to time by means of ordinary brokers' transactions."