The migration of U.S. consumers away from traditional multichannel pay-TV has been ongoing for the past decade and the shift is expected to increase moderately in the next 12 months, with several noteworthy accelerants contributing to long-term subscriber losses, according to Kagan, a media research group within S&P Global Market Intelligence.
While traditional multichannel video subscriptions has long been the top home entertainment choice for U.S. households, the loss of content exclusivity is expected to shift the consumer base towards over-the-top video services such as Netflix, Amazon Prime Video and Hulu, and fuel the growing ranks of online-only video households.
At the same time, Kagan contends increased prices for broadband, coupled with a series of OTT price hikes are impacting subscriber growth in the virtual multichannel space – notably at DirecTV Now and Sling TV. However, the combined households relying on traditional and virtual multichannel services for video entertainment are still expected to account for the majority of occupied homes through 2023 with 64% of the market.
Indeed, Kagan projects total traditional multichannel subscriptions (including residential and commercial) will drop 16.4 million to 73.6 million. Traditional residential multichannel households (excluding commercial and overlap) will drop 15.6 million to 70.5 million.
Virtual multichannel households will increase 6.4 million to 13.5 million. Combined traditional and virtual multichannel will drop to 84 million residential subscribers. Online video-only (Sling TV, DirecTV Now, YouTube TV, PlayStation Vue, etc.) households will add 10.6 million subs to 25.2 million. Burgeoning over-the-air (OTA) digital antennae households will add 3.8 million households to 21 million.