How coronavirus is speeding up a la carte cord-cutting

When deciding to drop cable or satellite TV, there are two potential paths a cord cutter can take.

The first is to replace the cable bundle with a streaming one, using services like YouTube TV, Hulu + Live TV, or Sling TV. The second is to cobble together various standalone services such as Netflix, Amazon Prime, and Hulu, perhaps throwing in a TV antenna for good measure.

Each approach has its pros and cons, and there’s room for them to overlap. But I’ve been predicting for a while that we’ll ultimately see more people choose the latter approach. As the best content becomes available outside the bundle, the ever-increasing costs of cable channels will become too much to justify.

Now, the coronavirus pandemic is accelerating that trend. With professional sports on hold, and millions of people facing unemployment or salary reductions, traditional TV bundles have entered free fall, and their streaming replacements have stopped growing.

While you might expect the TV industry to respond with lower prices or more flexible packaging, they seem to have accepted the bundle’s fate. Rather than trying to save the old business model, they’re accelerating its decline through even higher prices, which they’ll use to build their own a la carte alternatives.

The big bundle breakup

Last quarter, the pay TV bundle business lost 1.8 million subscribers, according to analyst firm MoffettNathanson. Most of those losses came from the usual suspects—satellite TV lost about 1 million customers, while cable lost a half-million—but the big story was on the streaming side. MoffettNathanson estimated that 341,000 customers stopped paying for live TV bundles, marking the first quarter in which these services collectively lost subscribers.

Bear in mind that these figures only run through the end of March, just a couple weeks into the pandemic’s spread in the United States. There’s a good chance next quarter’s numbers will be a lot worse for the pay TV business.

At the same time, standalone streaming services are booming: Disney+ has 54.5 million subscribers, up from 50 million in early April. Hulu ended the quarter with 32.1 million subscribers, up from 30.4 million last quarter. Netflix added 15.8 million subscribers last quarter, more than doubling its expected growth. CBS All Access and Showtime now reach a combined 13.5 million subscribers, up 50 percent year-over-year.