Turns out not even the world’s most popular video-streaming platform can fight the tide of cord-cutting.
We speak, of course, of YouTube, which according to MoffettNathanson estimates issued last week saw the first-ever quarterly subscriber loss for its virtual pay TV platform, YouTube TV, in Q1 2024.
The virtual MVPD (multichannel video programming distributor) shed an estimated 150,000 subscribers that quarter — “likely,” as a MoffettNathanson research note put it, “as a result of more natural churn tied to [NFL] Sunday Ticket.”
Indeed, this was an inevitable consequence of YouTube offering the NFL’s out-of-market package through its vMVPD service. For several years now, the football-fueled seasonality of cord-cutting has been an observable phenomenon, with pay TV’s net subscriber losses dipping significantly in Q3 and Q4 and surging in Q1 and Q2.
Football fans who signed up for YouTube TV to catch Sunday Ticket games were therefore never going to be the most loyal customers. But this loss underscores a broader and more troubling problem facing virtual MVPDs: It’s becoming more and more apparent that they’re in the same boat as their traditional counterparts.
According to MoffettNathanson, in recent quarters only about a fourth of cord-cutters have converted to a vMVPD subscription — and that accounts for a full year following their cancellations. Consequently, vMVPDs have seen their user growth drastically slow over the past few years, with subscriptions at three of the largest players — Fubo, Sling and Hulu — growing by less than 150,000 year-over-year in Q1.
While YouTube TV does not regularly report its subscriber totals, the available data puts it far and away at the head of the vMVPD pack. YouTube’s last official disclosure came in February, when it declared the service had more than 8 million subscribers.
Still, it’s an open question as to how much further YouTube TV can grow. Arguably the biggest problem facing the service and its vMVPD brethren is the simple fact that, without original content to offer, these platforms are hobbled by the dearth of must-watch linear TV content outside of sports.
For instance: Remember how “Game of Thrones” was must-see viewing the night it aired on HBO? Judging by viewership data, that’s not the case for the network’s prequel series “House of the Dragon,” which recently kicked off its second season with 7.8 million Sunday-night viewers — a 22% decline from the series premiere.
That number will certainly grow over time, but that’s just the problem: Many, even most, “House of the Dragon” viewers now feel comfortable catching up with the show on their own schedule. Appointment TV, in other words, is officially all but dead, and that’s as bad for digital pay TV providers as it is for traditional ones.
With live sports essentially the only content left to tie consumers to the linear TV ecosystem (for now), it’s clear that vMVPDs’ primary virtue for consumers — combining the live TV offering of cable with the flexibility of an SVOD subscription — is now a major liability. It’s simply all too easy for sports fans to churn out seasonally with the “no commitment” policy openly touted by vMVPD services.
YouTube TV at least has one major advantage over its competitors in Sunday Ticket, the one piece of “original” premium content the platform boasts. And seasonal cancellations aren’t going to kill the service; many of those churned fans will likely return at the start of the next NFL season (provided Sunday Ticket still exists following Thursday’s antitrust trial verdict).
But if YouTube parent Alphabet wants to build the vMVPD into a sustainable business, it will need to at least consider some changes — expanding its presence in the SVOD aggregation game, for instance. YouTube TV already offers add-on subscriptions to Max, Starz and AMC+; it’s a no-brainer to try to add more (and more popular) streamers to that roster.
Because the fact is, with the pay TV ecosystem drying up fast, simply rehousing the old business model in a new package isn’t enough. Anyone hoping to succeed in the space — even one of the world’s largest tech behemoths — will need to chart a course for the future.