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Analyst: Hulu — Not Netflix — Driving Pay-TV Cord-Cutting

23 Jun, 2017 By: Erik Gruenwedel



Pay-TV operators suffered a disastrous first quarter, losing a combined 762,000 video subscribers, according to analyst firm MoffettNathanson. Conventional wisdom suggests Netflix spearheads ongoing siphoning of consumers looking for cheaper alternatives to video consumption.

That would be a wrong assumption, according to Corey Barrett, senior media analyst at M Science in New York. Speaking June 23 on CNBC’s “Power Lunch,” Barrett said Hulu subscribers are showing a higher propensity to cut the cord than Netflix subs.

“I don’t think the idea that cord-cutting is accelerating is a surprise. What really stood out to us was that it was most pronounced among Hulu subscribers,” Barrett said. “I think there’s a misconception that Netflix is actively driving cord-cutting behavior.

Hulu, which is co-owned by Disney, Fox, Comcast and Time Warner, ranks third among domestic SVOD services with less than 15 million subscribers. It just launched an online TV service dubbed “Hulu Live With TV.”

Barrett said the percentage of cord-cutters among Netflix subs is similar to the average consumer.

CNBC moderators suggested Hulu subs cutting the cord are essentially trading one ad-based channel for another. They seemed unaware Hulu also offers ad-free service.

The analyst said upstart online TV services such as Hulu and YouTube TV will likely be more disruptive to pay-TV than Sling TV and DirecTV Now — two services originating within the pay-TV ecosystem from Dish Network and AT&T, respectively.

MoffettNathanson contends Hulu Live TV has about 1.8 million subs and could generate $71 million in annual ad revenue on top of about $568 million in sub fees — largely through its media owners.

M Science’s Barrett contends Charter Communications is more at risk than Comcast to cord-cutting following acquisitions of Time Warner Cable and Bright House Networks (now Spectrum).

“The legacy of cord-cutting at Charter continues in Q2,” he said, adding the practice is increasing at Comcast as well. 

Interestingly, there was no mention of Charter Spectrum TV Plus, the $20 standalone online TV service offered to Charter broadband-only subs last year — with a free Roku 3 player.


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