The rush of consumers to sign up for streaming services such as Netflix and the cancellation of live sports due to the coronavirus are “accelerating” the movement to cut cable, Ben Silverman, former NBC co-chairman, said Tuesday.
“The longer that we don’t have sports, the more accelerating the cord-cutting will be,” Silverman said on “Closing Bell.” “I think the sports was what was having people hold on to their traditional packages, and without it they’re discovering a lot of entertainment choices in streaming and at lower costs.”
The coronavirus pandemic has forced major sports leagues, including the National Basketball Association and Major League Baseball, to suspend or cancel their seasons. At the same time, the number of new Netflix subscribers soared past expectations in the first quarter as people were confined to their homes.
The company announced after the bell on Tuesday that it had a net addition of 15.77 million new subscribers around the world in the first quarter. Analysts were expecting roughly 8 million new subscribers, according to FactSet.
The surge in interest in streaming, even with some successful programs by major broadcast networks, could lead consumers to decide they no longer need a cable package.
“It’s going to be tricky, because on the other side you’re also seeing the broadcasters are having giant ratings. They’re doing as well as they’ve ever done, but they’re so advertising-dependent … but I worry most about cable and the cable channels,” Silverman said, adding that major broadcast channels can be picked up using an antenna.
Netflix CEO Reed Hastings said the jump in viewership and subscriber growth was likely to be temporary and would decelerate once coronavirus restrictions were lifted.
Netflix is not the only company that could see a boost in subscriber growth as customers look for entertainment options. Disney, which has the Disney+ streaming service, has not yet reported its quarterly earnings, and NBCUniversal and HBO are rolling out new streaming services this spring.
Silverman, who is now co-CEO and chairman of Propagate Content, said he expected that production of shows and movies would resume in one form or another in order to fulfill increased demand from streaming services.
“The reruns will dry up at a certain point, so there’s going to be a return to production. It may not be as it used to be, but it’s going to be sooner than we thought because people are delaying so much,” Silverman said.
Disclosure: NBCUniversal is the parent company of CNBC. Comcast is the parent company of NBCUniversal.