Traditional television services in the United States have been slowly losing subscribers, although some of them are converting to online video customers. The real gain has been in internet connections, where the margins are higher. It seems that what service providers lose in the subscriber swings they are gaining in roundabout ways.

AT&T lost 188,000 DIRECTV satellite television subscribers in the first quarter of 2018 and added only 1,000 U-verse video customers, although that is the first gain for the service for 11 quarters.

Meanwhile AT&T gained 312,000 DIRECTV NOW customers, including 49,000 still in a free trial period, taking that to a total of 1.47 million.

So overall, AT&T gained 76,000 paid video customers. It says that it has now stabilised its total video customer base since it acquired DIRECTV.

In total, AT&T has 25.37 million video customers in the United States, including DIRECTV NOW, compared to 25.49 million DIRECTV and U-verse customers in mid 2015.

Across its satellite, telco and online video services, AT&T has maintained around 25.4 million customers over the previous year, despite losing 1.13 million traditional television subscriptions.

AT&T is about to deploy a new platform for DIRECTV NOW, which will include network based digital video recording.

Average revenue for online video customers is lower, although so are customer acquisition costs. Overall, video entertainment revenue was down by $660 million or 7.3% on the same quarter the previous year.

Internet revenue was up 3.25% over the same period, with 95,000 additional internet customers. Nevertheless, the overall entertainment group saw revenue fall by over a billion dollars for the quarter, to $11.58 billion, although some $200,000 of that was due to a change in accounting method. On a comparative basis, entertainment group revenue was down 6.4% year on year, which is attributable to the decline in subscribers to legacy linear television services.

“I think we’re going to continue to see challenges in the satellite in the linear pay-TV model as we’ve talked about,” John Stephens, the chief financial officer of AT&T told analysts. “We’ll continue to see real opportunities to shift to the over-the-top and continue to grow DIRECTV NOW.”

Comcast meanwhile lost 93,000 video customers, compared to losing 33,000 the previous quarter and a gain of 42,000 for the first quarter the previous year.

However, Comcast gained 351,000 residential internet subscribers, compared to 318,000 the previous quarter and 397,000 for the first quarter the previous year.

Comcast has 21.21 million residential video subscribers, compared to 24.21 million internet subscribers.

Video revenues of $5.66 billion were down slightly on the same quarter the previous year, while internet revenues were up over 8% at $4.16 billion.

Brian Roberts, the chief executive of Comcast, acknowledged that the increasing presence of online video services had contributed to its loss of video customers, although he told analysts its X1 platform aimed to be a whole-home entertainment hub, integrating services like Netflix and Pandora.

“The value that this seamless integration of services brings to our customers is quite apparent,” he said. “X1 has quickly become the most used platform for Netflix viewing among our customers.”

He also referred to a firm offer to acquire the Sky business in Europe. “We believe Sky, when combined with Comcast NBCUniversal, will create an even stronger and more international business with an increased ability to invest in content and innovation,” he said. “A larger combined base of 52 million customers will help support the ability of a combined Comcast Sky to invest more in original and acquired programming and technology capabilities as we strive to deliver truly differentiated customer experiences.”

Charter Communications, the third largest television service provider in the United States, lost 122,000 video subscribers, having broken a run of six consecutive quarters of subscriber losses the previous quarter.

The majority of its video subscriber losses were in the legacy Time Warner Cable areas, where it lost 90,000 customers, compared to losing 32,000 in its own former footprint, and none among former Bright House customers.

Charter has yet to convert all its cable customers to all-digital services. 20% of its acquired Time Warner Cable footprint and 60% of the former Bright House Networks customers are not all-digital.

Tom Rutledge, the chief executive of Charter, told analysts “The whole company will be fully digitized by end of this year, as we deploy fully functioning two way digital set top boxes”.

“The all-digital project though is clearly in the long-term interest of our business, it allows us to free up bandwidth and to realize the full potential and capacity of our network as well as further improve video product itself,” he said.

“The changes in the video business they are significant and hard to predict, but we still think there’s video growth capable inside of our asset base,” he said, although he noted “there is very little margin in the video business.”

The company gained internet customers, adding 33,000 in the first quarter of 2018, taking its total to 22.88 million, compared to 16.42 million video customers.

Video and internet revenues were both up compared to the previous quarter and the prior year, at $4.30 billion and $3.71 billion respectively.

Verizon reported a loss of 22,000 Fios video subscribers in the first quarter of 2018, contributing to loss of 84,000 over 12 months, taking its total to just under 4.60 million. Internet connections were up by 66,000 to 5.92 million, an increase of 228,000 over 12 months.

“Fios consumer revenue increased 1.2% driven by the growing demand for high-quality broadband service,” explained Matt Ellis, the chief finance officer of Verizon. He said the video losses “were indicative of the continued secular trend for cord cutting on the traditional linear video bundle.”

Despite the steady drip of customers leaking out of legacy television services, online alternatives demand more fixed and mobile network connectivity, which is a high margin growth business for service providers.