Streaming Services Could Start Hurting Video Subs in 2018, UBS Analyst Says

Cable video subscriber numbers should continue growing this year, but competition also will grow with the launches of additional streaming services, UBS analyst John Hodulik wrote investors. AT&T's DirecTV Now virtual multichannel video programming distributor service (see 1612010025) by itself won't affect cable trends, but similar streaming services from Amazon, Hulu and Google's YouTube could, he said. An inflection point in cable video subscriber trends likely won't come until 2018 since connectivity and quality issues that come with initial product releases likely means a slow start for virtual MVPDs, he said. Hodulik said Comcast likely will launch a wireless service in the second half of the year in the $40 per month price range, though mobile virtual network operator agreement economics make it unlikely the service will be unlimited or zero-rated. For wireless carriers, he said, the result will be higher industry churn and increased promotional activity as smaller carriers try to keep their momentum. Hodulik Tuesday laid out implications of several possible deals, including Sprint/T-Mobile, Dish Network/T-Mobile, Charter Communications/T-Mobile and Verizon/Charter. He said it's not clear who would be the buyer in a Sprint and T-Mobile deal, and it would benefit AT&T and Verizon through reduced competition while complicating cable entry into wireless. He said Dish/T-Mobile would solve T-Mobile's spectrum needs and monetize Dish's spectrum, while Charter/T-Mobile could lead to further cable-wireless transactions. He said Verizon/Charter would likely face significant regulatory conditions.