As prescribed by the First Law of Cartoon Physics (and substantiated by generations of Looney Tunes shorts), a body suspended in space will remain impervious to gravitational forces until said body becomes aware of its circumstances. Hot on the tail of the Road Runner, Wile E. Coyote’s furious momentum takes him skittering over the edge of a cliff. For a few beats, the besotted predator remains suspended in thin air, legs churning like furry brown pistons, until he makes the grave error of looking down, whereupon the time-honored formula of 32 feet per second per second kicks in. The canyon floor awaits.
If linear TV has yet to have its doomed-coyote moment, it’s because the medium remains on terra firma. Despite the erosive incursions of streaming and a generational disdain for the shopworn charms of the tube, TV is still the primary vehicle through which Americans consume top-shelf sports content—and that dynamic likely will persist through the expiration of the NFL’s new rights deal. (Such endurance, of course, is by design.) Still, given the acceleration in cord-cutting and a steady uptick in streaming impressions, the networks might want to keep their ACME parachutes within arm’s reach.
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First, the bad news. According to a research report issued earlier in the week by MoffettNathanson, consumers are now ditching the traditional cable bundle with an urgency that suggests a headlong plunge into the post-TV future. In the second quarter of 2022, nearly 7 million households canceled their cable/satellite/telco subscriptions, as the number of pay-TV accounts fell 10% versus the year-ago period to 64.2 million. Before the year is out, those who continue to buy into the bundle will be in the minority; as of June 30, 52% of U.S. TV homes subscribed to a cable package. Five years ago, pay-TV penetration was a sturdy 80%.
If the [literal] decimation of the cable ranks in 12 months’ time isn’t sufficiently alarming, try zooming out a bit. In eight years’ time, 35.1 million households have parted ways with the likes of Comcast, Spectrum, DirecTV and DISH Network, and while the initial defections were minimal—in the second quarter of 2015, the rate of churn worked out to less than 1%—the losses have mounted in conjunction with the proliferation of alternative viewing platforms.
It gets worse. Whereas the so-called “skinny bundles” (a catch-all for the streamlined services offered by Sling TV, Hulu Live, fuboTV and other virtual MVPDs) once largely negated the losses in the traditional pay-TV space, those conversions also are losing steam. As analysts Craig Moffett and Michael Nathanson demonstrate in their report, rather than shifting from the bundle to one of the cheaper vMVPDs, most consumers are now dispensing with subscription television altogether. Four years ago, 90% of the defectors from the legacy bundle downgraded to a cheaper vMVPD package, but as the skinny bundles began fattening up their subscription fees, their perceived value plummeted like a cartoon anvil. In the most recent earnings quarter, the conversion rate dropped to 26%.
The losses are not equally distributed. Cable operators are now dealing with an annual churn rate of just under 8%, while the satellite-TV providers are losing ground at an even faster clip (-13%). While the rise of rural fiber build-outs hasn’t done DirecTV and DISH any favors, their shared antipathy toward paying sky-high sports-programming fees hasn’t exactly been a winner on the customer-retention front. DISH effectively slammed the door on local sports when it dropped the last of its RSNs in 2021, while DirecTV’s eagerness to punt away the rights to NFL Sunday Ticket will eliminate the one feature that differentiated its service from any other. DISH Net’s second-quarter churn slumped to 9%, while its counterpart, which lost an estimated $500 million per year on Sunday Ticket, saw its video base drop 16%.
If it’s difficult to determine how cord-cutters are getting their sports fix—to put it charitably, the available data on the number of people who pull TV signals from out of the air via an antenna is spotty at best—the Nielsen numbers suggest that the ongoing defections haven’t interfered with the NFL juggernaut. While overall TV usage has fallen nearly 20% in just the last two years, the NFL’s ratings are still on the upswing. With an average draw of 18.7 million viewers, the NFL’s linear TV deliveries are up 5% versus the analogous period in 2021. Much of those gains are taking place on Sunday afternoons, as the early half of the CBS/Fox doubleheaders are up 11% while the TV audience for the national showcase that kicks off at around 4:20 p.m. ET is up 8% to 24.1 million viewers.
College football deliveries are also up versus last fall: The various telecasts across the broadcast and cable landscape have improved 3%. Again, it’s worth noting that these gains are happening at a time of record declines in overall TV usage.
At the same time football deliveries are on the rise, the NFL’s first big leap into an exclusive streaming arrangement is already paying off. Per Nielsen, Amazon Prime Video’s first two installments of Thursday Night Football averaged just shy of 12 million total viewers, of whom about 9.64 million streamed the action. That represents a significant digital turnout for a live sports production, one that reinforces the NFL’s hunch that fans would embrace a primetime streaming showcase. Traditional TV hasn’t been shut out of the TNF sweepstakes altogether; with an average of 1.17 million viewers in the four home markets tuning in via their local affiliates and another 1.14 million taking in the action from bars, restaurants and other public venues, TV still accounts for nearly 20% of the streaming package’s overall deliveries.
In other words, fans are seeking out—and finding—NFL games regardless of the virtual venue. Older enthusiasts who might otherwise have been shut out by Amazon’s exclusive pact are still able to keep up with the new-look TNF, while younger viewers who are already familiar with the trappings of over-the-top platforms have made the switch with the effortlessness that characterizes their generational cohort. Yes, there has been some slippage—discounting the special Christmas meeting between the Browns and Packers that served up north of 29 million viewers last year, Fox and NFL Network’s final season of TNF averaged 14.9 million viewers—but thus far, the Amazon’s deliveries have exceeded all internal expectations.
Meanwhile, the NFL’s TV partners are seeing a surge in digital deliveries that coincides with the expansion of their in-house OTT platforms. Season-to-date, NBC’s Sunday Night Football is drawing an average streaming audience of 1.4 million viewers, which marks a 32% lift compared to the first three weeks of the 2021 campaign. Those digital gains have more than made up for the slight downtick (-2%) in linear deliveries—and that decline was largely shaped by one of the ugliest primetime matchups in recent memory. Only the hardiest souls and the most degenerate gamblers managed to gut out the entirety of the Sept. 25 49ers-Broncos game, a gruesome carnival of errors that ended in an 11-10 Denver win.
While all evidence of last Sunday’s primetime game should be erased from the NFL archives, the sloppy stalemate still managed to scare up an average audience of 18.9 million viewers, a turnout that included 6.58 million adults 18-49. By way of comparison, the broadcast entertainment shows are currently drawing 4.16 million viewers—of whom 686,855 are members of TV’s dollar demo.
Football keeps the coyote aloft. Just don’t look down.
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