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This comes at the same time the cable and satellite industry is grappling with a record 1.5 million customers cutting the cord during the second quarter. Altogether, nearly 5 million customers have ditched their traditional TV service in the last year. 

“Well, the final numbers [for Q2] are in, and they are indeed ‘freaking ugly,'” MoffettNathanson analysts Craig Moffett and Michael Nathanson wrote in a note to clients earlier this month. “Not just for traditional distributors, where the rate of subscriber decline accelerated to 5.4%… but, perhaps more importantly, ‘freaking ugly’ for the programmers, as well, where the conversion rate of traditional losses to vMVPD gains hit a wall, leaving overall live distribution down by 2.8% year-over-year.” 

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In other words, services like AT&T Now and Dish’s Sling TV aren’t picking up nearly enough subscribers to offset the loss of their traditional counter points. 

Some vMVPDs, such as Hulu Live and YouTube TV, have gained traction. Both services gained 300,000 subscribers during Q2, with Hulu hitting 2.4 million subscribers, while YouTube TV had 1.5 million. 

Still, “neither appears to have grown fast enough to offset the sharp deceleration experienced by everyone else,” Nathanason and Moffett said in their note.

A look at Hulu and YouTube’s live TV customer growth, via MoffettNathanson

What gives? 

Nathanson, during a recent conversation with TheWrap, pointed to several reasons vMVPDs have lost their luster. 

One of the larger factors being price increases. AT&T Now went from $50 to $70 earlier this year, YouTube TV is now $50 a month after initially costing $35 a month, and Sling TV bumped up the price of its base package by $5 in March. Hulu also increased its live TV deal from $40 to $45 per month in January. 

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“[AT&T Now] is cycling through customers who were added via low cost teaser rates that are now cycling off as the product has become more expensive,” said Nathanson, who noted that seasonal churn due to less sports programming could also account for some of the losses. 

Price increases for many streaming TV services are unavoidable, said nScreenMedia’s chief analyst Colin Dixon, explaining that vMVPDs face the same price hikes as traditional pay TV.

“Virtual MVPDs are subject to the same problems that traditional pay television is, which is that the broadcasters are demanding and getting higher than inflation increases in license fees,” he said. “In fact, they are more subject to it because there’s virtually no profit in a virtual MVPD, there’s nowhere to hide. When a provider increases the price to them, they have no choice but to raise the price or they make a loss.”

Dixon also says the slow growth of vMVPD platforms can be attributed to them being transitional services, mainly being used by recent cord cutters that haven’t fully transitioned to using SVOD or AVOD services.

“People who are changing to virtual MVPD are those people that are already not using their pay TV subscription or not nearly as much as they used to,” Dixon said. “And so when they switch, they’re getting their vMVPD services because there’s a couple of things they still want that they can’t get outside of a pay TV.”

Dixon believes the value of these services will continue to drop for consumers, as SVOD offerings become more appealing.

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“We are now seeing broadcasters even putting top quality content exclusively online,” he said. “‘Star Trek: Discovery’ on CBS All Access is an example of that and Disney has already said that they’re going to be putting a Star Wars show inside of its service, which won’t be available on their broadcast channels.” 

Over time, this will erode the need for the traditional and virtual MVPD ecosystem, says Dixon.