October 13, 2020
While cord-cutting among linear pay-TV households isn’t new, the pace of disruption is. New data from eMarketers found that U.S. pay-TV households dropping service will increase 7.5% in 2020, resulting in a market size of 77.6 million households. Previous data had pay-TV households dropping to 80.5 million. The data excludes online TV services such as Sling TV, AT&T TV, Philo and YouTube TV, among others.
The firm estimates that the number of households dropping pay-TV service combined with households that have never had a subscription, will increase to 51.7 million from 48.9 million.
“The pandemic increased pay-TV losses because it tightened consumers’ wallets and caused the cancellation of live sporting events, which are one of the main draws of cable and satellite operators,” Ross Benes with eMarketer wrote in the report. “Pay-TV providers have also cut back on some of their promotional pricing to sustain profitability. But as prices increased, so did cord-cutting.”
Benes found that when including online TV with pay-TV, household declines looked “slightly less dire.” This year, 86.1 million U.S. households will have pay TV/online TV, a 5.9% year-over-year decrease, which translates to 66% of households having combined service.
2020 will end with 10 million U.S. households having online TV service, up from 9.5 million in 2019. When these products first launched several years ago, they were sold at a discount to attract new customers. But with TV affiliate fees growing, online TV prices have significantly increased, eroding one of their main advantages over traditional TV, according to Benes.
He wrote that while adding or dropping online TV service is much easier than traditional pay-TV, eroding price advantages between the two is hurting online TV market growth.
“When analyzed this way, the number of cord-cutters and cord-nevers combined will not surpass the number of pay-TV/online TV viewers this year,” Benes wrote. “However, their paths are converging, and most of the customers leaving traditional TV are not replacing it with online TV.”