DirecTV and Dish Network had a lousy 2018. Combined, they lost a staggering number of subscribers, which raises the question: Can satellite TV be saved? And if so, is it worth the effort?

According to the Leichtman Research Group’s newest figures, DirecTV and Dish lost 2,875,000 net video subscribers in 2018, compared to a pro forma loss of about 1,510,000 subscribers in 2017. Those numbers are shocking in their own right, but are even more stunning when considering that those services lost only 40,000 subscribers in 2016.

DirecTV and Dish are not alone. Every major traditional TV distributor except for AT&T U-verse lost subscribers in 2018. Comcast losing 371,000 video subscribers last year is certainly nothing to write home about.

But DirecTV and Dish stand out as the only pay TV providers with losses in the millions. Michael Goodman, director of digital media strategies for Strategy Analytics, put it succinctly.

“Quite frankly satellite is getting its head handed to it,” Goodman said.

DirecTV still has more than 19.2 million subscribers and Dish has approximately 9.9 million, so they are respectively still the second- and fourth-largest pay TV services in the U.S. But if subscriber losses continue to pile up like they did in 2018, it won’t be long before DirecTV and Dish fall behind.

DirecTV and Dish are both satellite providers but their circumstances differ, meaning outlooks differ for the futures of the two services.

DirecTV

DirecTV is a premium product. Goodman called it “the Cadillac of pay TV services” with a corresponding price point and historically higher average revenue per user.

But with streaming service DirecTV Now, consumers can get pretty much most of what is available with DirecTV at a much lower price point. And AT&T is currently testing a fuller streaming version of DirecTV, complete with a proprietary streaming set-top box based on Android TV.

AT&T’s idea isn’t necessarily to replace its satellite TV service but to offer an alternative with a much lower cost of acquisition. It’s not hard to imagine though that this new streaming DirecTV product, along with DirecTV Now, will continue to cannibalize traditional DirecTV.

As Goodman pointed out, the growth of video subscription services overall is also hurting DirecTV, as more consumers look toward building their own makeshift programming bundles rather than pay high prices for traditional pay TV.

But DirecTV still has a huge number of subscribers and, thanks to its parent company AT&T, it can package home broadband and phone with its TV service. That’s an advantage its closest competitor Dish doesn’t have.

Dish Network

Dish has positioned itself as a lower cost, more rural service, and that means it’s been hurt even more by price-conscious customers, Goodman said.

Like DirecTV, Dish also has a streaming TV service, Sling TV, that is likely cannibalizing some of its subscribers but still somewhat offsetting its traditional TV subscriber losses. But unlike DirecTV, Dish doesn’t have a broadband product to offer alongside its satellite or streaming TV product.

Dish used to offer broadband through its dishNET product. However, as of the first quarter of 2018, Dish transitioned its broadband business focus from wholesale to authorized representative arrangements and stopped marketing dishNET broadband services. As a result, the company said its existing broadband subscriber numbers will decline through customer attrition.

The company has a deep trove of wireless spectrum, and it plans to use it for a 5G narrowband IoT network. The company will spend about $1 billion on that network by 2020 and could spend as much as $10 billion overall. But that network—which will be based on Release 16 from 3GPP—will be intended for offering neutral-host capacity and services. The company hasn’t talked about using the network to offer in-home broadband.

But that’s not to say Dish wouldn’t have an opportunity to bundle internet service once it builds out its 5G network. T-Mobile (if it’s successful in acquiring Sprint) plans to launch a 5G-powered in-home broadband service, and Dish could likely use that as a blueprint for a similar product of its own.

But Goodman said, theoretically speaking, building out a 5G broadband footprint that matches Dish’s TV service footprint will take a lot longer than it takes to launch a satellite.

“It’s going to take a lot of time and, at their current loss rate, time they may not have,” Goodman said.

Satellite’s future

Dramatic losses and shifting consumer trends aside, Goodman said there remains an opportunity for satellite. Satellite has historically been a rural product, and that will continue to be its strength. Although 5G networks could enable internet TV distribution in rural areas, the low density of households in rural markets means cell sites in rural neighborhoods might only reach two or three households.

“Satellite has always been the most cost-effective way of getting video into rural households,” Goodman said.

Goodman warned that significant disruption is still coming for the U.S. satellite TV market and that maybe Dish and DirecTV will need to combine at some point if they want to survive. But for now, he said there continues to be a market for satellite TV.