Q3 Could See NFL Sack Cord-Cutting Surge
With the third-quarter earnings season set to begin next week for the media sector, investors may be bracing themselves for the video subscriber numbers that could impact pay TV distributors and programmers alike. The first two quarters of the year saw an unmistakable acceleration in the cord-cutting now reaching record levels.
But as counterintuitive as it sounds, don’t be so sure we’ll see that acceleration continue in Q3 due to one big factor: the beginning of the NFL season. Look back on the past two years, and you’ll see the third quarter has been kindest to TV subscriptions, either bucking the trend of decline entirely or softening it to very minor levels.
Q3 is when the NFL season kicks off every year. So with the league seeing a continued viewing resurgence, 2022 will prove to be an interesting test of both how much momentum cord-cutting currently has and how strong the NFL’s drawing power really is.
A sign of how the NFL can be used as a barometer for TV subscription fortunes is how most of the league’s TV timeslots are pulling in more viewers than in recent years, led by the tremendous performance of the 4:25 p.m. Sunday National game slot shared between Fox and CBS. Unless the hypothesis that only existing pay TV subscribers are watching more NFL is true, some of the influx of new subscribers coming in will be driven by NFL games.
It’s also important to note that as strong as the TV numbers are, CBS and NBC national, and in CBS’ case, local, televised games are available on Paramount+ ($9.99 tier) and Peacock ($4.99 tier) and will mean that total audience is even greater.
It's the virtual MVPD services that get the lion's share of new subscribers compared with their counterparts, the more traditional and expensive pay TV services. The VMVPDs offer monthly — read: flexible — subscriptions, allowing consumers to sign up for the season. Note that YouTube TV is not included in this analysis, as it only sporadically releases subscriber figures, but given its upward trajectory — 5 million subscribers as of Q2 2022 — it's not hard to imagine it has taken some of the VMVPD NFL fan subscriber share from competitors like Hulu.
As noted before, Peacock and Paramount+ offer the ability to watch Sunday Night Football (NBC) and local and national game feeds (CBS) for a combined total of $14.98 a month, with NFL+ offering all national and localized games at $4.99 a month.
For some of those who were subscribing to VMVPD packages for NFL games, this may be too good of a bargain. At $20 for all the NFL games you could watch on broadcast TV, plus movies and exclusive series, with all that’s missing being the ESPN Monday night games and Amazon Thursday games (which are also free on Twitch)? It’s a lot cheaper than the $35-$50 Sling TV charges or the packages starting from $70 at FuboTV, $65 at YouTube TV or $70 for Hulu With Live TV (which also includes ESPN+).
With Peacock seeing paid subscriber bumps coinciding with NFL access for the Super Bowl and season start, it’s not hard to imagine that Q3’s pay TV figures will be the softest since 2019 (but still nowhere near as bad as cord-cutting looks in this quarter during 2018). That still speaks to the power of the NFL upon the market and why media partners opted to each pay around a billion dollars more a year to maintain the rights.
As the first chart in this analysis shows, NFL viewers stick around until Q1, when the season ends, and only then will cord-cutting pick up its pace again. VIP+ expects that cycle to continue in 2022 and early 2023.
