Traditional pay TV subscriptions fell by a record-setting 1.8 million in the first quarter, according to an analysis by Craig Moffett of MoffettNathanson Research.

The 7.6% decline includes a 14.3% plunge for satellite, compared to a 4% drop for cable.

With sports off the air, and with the pain of the tsunami of unemployment just beginning to hit as the quarter ended, all these numbers will get worse in Q2,” Moffett said.

But Moffett noted that even more depressing than the drop in traditional pay-TV subs was a surprising decline in subscribers to streaming virtual MVPs like YouTube TV and Sling TV. Moffett said those vMVPs lost 341,000 subscribers in the first quarter.

“The vMVPDs, once viewed as the last line of defense for cable networks, imploded in Q1,” he said.

Moffett said that when Sony’s PlayStation Vue service closed in January, its subscribers appear to have gone nowhere. And AT&T Now, Sling, fubo all lost subscribers.

The Walt Disney Co.’s Hulu Live TV grew by just 100,000 subscribers.

Total pay-TV subscribers, including both traditional and vMVPDs are shrinking at a rate of 5.3% per year, Moffett said.

“It is perhaps some comfort that some of the same companies losing distribution for their traditional cable networks – we’re looking at you, Disney and Comcast – have launched direct-to-consumer 'lifeboats' that are rapidly gaining traction with distraction-starved, shut-in consumers,” Moffett said. “AT&T will join this club in a few weeks with the launch of HBO Max. But it is increasingly clear that as consumers climb into these lifeboats, they are leaving the (sinking) motherships behind.”

Led by better than expected growth in the U.S. and other corners of the globe, Netflix added a record 4.9 million new streaming subs worldwide in the first quarter, soundly beating its forecast of 4.1 million.

Netflix ended the period with 59.62 million subs, and expects to add a more modest 2.5 million in the second quarter.

In the U.S., Netflix added 2.28 million subs, extending its total to 41.40 million. It expects to add 600,000 in the second quarter.

On the international front, Netflix added 2.6 million subs, giving it 20.88 million, and expects to add another 2.9 million in the category during Q2 as it benefits from recent launches in Australia and New Zealand, which adds 8 million broadband subs to its addressable market. Netflix is slating a launch in Japan later this year.

While international subs were on the upswing, Netflix said the strong U.S. dollar hit earnings. Netflix posted net income of $24 million (38 cents per share), versus $53 million (86 cents per share) in the year-ago period. Revenues climbed to $1.4 billion in Q1 versus $1.07 billion in the year ago period.

Those reduced earnings didn’t hurt Netflix’s stock, which is was up $54.54 (11.47%) to $530 each in after-hours trading Wednesday. Netflix also announced it is seeking shareholder approval for an increase in our authorized shares, and that, if approved, expects to recommend a stock split. 

Netflix does not publicize streaming figures on a show-by-show basis, but said the third season of original series House of Cards “had its biggest launch yet in terms of viewers.”

Expect Netflix to keep pressing its original content. 

“We are increasingly spending on the promotion of our original content rather than emphasizing attributes of the Netflix brand and service that are now more familiar to consumers,” Netflix said in a letter to investors. “Early tests in international markets suggest this content focus is aiding member acquisition.”  

Netflix also plans to roll out an enhanced TV UI in the second half of the year, and is working on new ways to promote Netflix originals “using our data to help identify which members would be most likely to enjoy each original title.”

Netflix also said it has had second thoughts about its decision to work with ISPs in Australia on a non-metered version of its service that helped subs sidestep data consumption caps.

Though this sort of zero-rated service is common in Australia, “[w]e should have avoided that and will avoid it going forward,” Netflix said. “Fortunately, most fixed-line ISPs are raising or eliminating data caps in line with our belief that ISPs should provide great video for all services in a market and let consumers do the choosing.”

Netflix also weighed in on HBO Now, HBO’s new stand-alone OTT service, reiterating its believe that Netflix and HBO aren’t substitutes for one another.  It also views virtual MVPDs such as Sling TV and PlayStation Vue “as more competitive to the current pay TV bundle than to Netflix which is lower cost, has exclusive and original content, and is not focused on live television.”

Sparking yet another round of rumors about Apple’s pay-TV ambitions, the maker of the popular iPhone and iPad and the still-viable Apple TV box  is in licensing talks with programmers toward the development of an over-the-top subscription TV service outfitted with an Apple-crafted user interface, Re/code reported Wednesday, citing unnamed industry executives.

According to the report, Apple is exploring deals that will clear the way for an OTT service that would offer “bundles of programming – but not the entire TV lineup that pay TV providers generally offer  and sell it directly to consumers, over the Web.”

Word of Apple’s latest interest comes as distribution rights continue to loosen up, enabling new forms of so-called “virtual” MVPDs.

If Apple is successful, those deals, Re/code said, would enable it to follow in the footsteps of Sling TV, the slimmed-down OTT service from Dish Network that starts at $20 per month (read our review), or the fuller-freight PlayStation Vue offering from Sony that will also support a cloud DVR.

Re/code said Apple has demoed the proposed service to some programmers, but warned that distribution talks are in the “early stages,” and that pricing and when the service might launch are still part of the big unknown.

Rumors about Apple’s interest in developing a pay-TV service (or even an Apple TV set) have circulated for years.

Last March, industry sources confirmed reports (subscription required) that Apple and Comcast had been talking for at least two years about a deal that would enable an Apple-powered device to offer a mix of live TV and other subscription video services in partnership with the MSO. 

At the time, The Wall Street Journal said Apple was seeking a deal that allow it to provide its own interface and offer video services over managed IP connections that did not mingle with “best effort” broadband service traffic, and get a cut of the subscription fees. But those talks didn’t get very far, with one industry source saying that “Apple just wants too much.”

Comcast, meanwhile, has been pushing hard with X1, a next-gen video product equipped with a cloud-based interface and an in-home video streaming capability that is delivered over its managed IP distribution network.

According to Re/code, Apple’s now interested in developing a service that can ride on unmanaged broadband links.

Hundreds of thousands of people have already preregistered for Sling TV, the new over-the-top television service from Dish Network.

Sling TV was officially introduced at the Consumer Electronics Show on Jan. 5. At that point, the company put up a website allowing consumers to preregister, and Sling TV officials say the response has been overwhelming.

“We were building something pretty interesting but the reception that we got was beyond anything I could have imagined,” says Roger Lynch, CEO of Sling TV.

Sling TV is offering a handful of networks, led by ESPN, for $20 a month. Other networks on the service include CNN, TNT, TBS and Adult Swim from Turner, Food Network and HGTV from Scripps Networks Interactive and Disney Channel and ABC Family from Disney.

“The response has been phenomenal, so when we start rolling out, we’re going to have to start with just the people who preregistered,” Lynch says. “People can still preregister, but we’ve had hundreds of thousands of people [sign up]. And there’s been no marketing.”

Please visit B&C for the full story. 

Read the Multichannel News review of the Sling TV service here. 

Marking the dawn of the “virtual” multichannel video programing distributor era, Sony last week introduced PlayStation Vue, a cloud-driven pay TV service that will start off with a lineup of about 75 channels.

Sony has salted away distribution deals with several top programmers, including NBCUniversal, CBS, Fox Networks, Viacom, Discovery Communications and Scripps Networks Interactive. But if it’s going after a full-freight TV play, it has some significant gaps to fill. Not yet on that list are ABC, ESPN, Time Warner Inc., Turner Broadcasting System, A+E Networks and AMC Networks.

But Sony still has some time to get those deals done.

Sony’s initial invite-only beta preview gets underway later this month in New York, offering access on Play- Station 4 and PlayStation 3 consoles. The company said it will extend access to more Sony-made devices, as well as some non-Sony devices, including the iPad, later on.

Sony will launch PlayStation Vue on a commercial basis in the first quarter of 2015 and has already identified three other launch markets: Chicago, Philadelphia and Los Angeles.

The service will feature catchup and video-on-demand services, a recommendation engine and a cloud DVR “without storage restrictions or scheduling conflicts” — with the caveat that customers must view those recordings within 28 days.

Sony’s strategy seems to diverge a bit from the OTT project underway at Dish Network, which is expected to feature a skinnier lineup that will cost about $30 per month. Dish has announced OTT distribution rights with The Walt Disney Co., A+E Networks and Scripps.

Sony has not revealed pricing and packaging for PlayStation Vue, other than to say it would be “fair and competitive” with “no hidden fees or charges.” Another plus: no equipment rentals or truck rolls.

In a research note, Todd Juenger, an analyst with Bernstein Research, estimated that Sony’s offering will fetch “$35 or so,” based on the networks currently on board. Factoring in a 20% premium, he said he sees Sony’s affiliate fee running at about $28. That could rise to $45 to $50 per month if Sony adds more key programmers to the mix.