Report: Global Pay-TV Market to Add 15 Million Subs Through 2026

Pay-TV isn’t dead. Despite living in an over-the-top video ecosystem, new data from Digital TV Research projects the addition of 15 million pay-TV subscribers between 2020 and 2026, bringing the global subscriber base to 1.02 billion. Through 2026, 92 countries will add pay-TV subs and 46 countries will lose subscribers.

China and India together will continue to provide just under half the world’s pay-TV subs. China will lose 10 million subs who see OTT video platforms as more appealing than traditional pay-TV. However, India will add 21 million pay-TV subs. The U.S. will be the biggest pay-TV loser — down by 16 million subs through 2026.

Online TV platforms will add 63 million subs through 2026 to take its total to 378 million. There will be 412 million cable subs (both analog and digital) by 2026 — 46 million fewer than the 458 million subs recorded in 2020. Satellite TV will lose 8 million subs to total 203 million. Pay-DTT (digital terrestrial television) will grow by 6 million subs to reach 25 million. Many of the DTT subs will be in Africa.

Hub: Average Consumer Nearing Six Different Video Sources in the Home

Americans have their bases covered when it comes to accessing video and television in the home. New data from Hub Research finds that the typical consumer accesses 5.7 different sources of TV content, including traditional pay-TV service, all available streaming services, and over-the-air reception through an antenna. That number jumped by nearly one full service since 2020, and is almost twice as high as it was in 2019.

Hub says about 80% of TV consumers now use a streaming TV service, 19% higher than the proportion who have a traditional pay-TV subscription (cable, satellite, or telecom). Not surprisingly, the proportion with traditional pay-TV has dropped seven percentage points since the same time last year.

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The percentage of consumers using any streaming TV service is up only 2% since last year. The large jump in the average number of services is attributed to an increase in the use of multiple streaming services, and greater adoption of free, ad-supported services such as Pluto TV, The Roku Channel and Tubi, among others.

Almost 60% of all TV consumers use two or more of the top SVODs: Netflix, Amazon Prime Video, Hulu, Disney+ or HBO Max. The percent using two or more top SVODs is up eight percentage points from 2020. Some of that increase is explained by the fact that HBO Max did not exist at this point in 2020, but it still demonstrates that consumers tend to add new streaming services without dropping their existing services.

Hub found that the percent of consumers using a free, ad-supported TV service is up eight points since last year, at 48%.

Don’t expect the size of consumers’ bundles to shrink: one in 5 (21%) say they plan to add new services in the next six months. And among those who plan to add, a strong majority say they’ll add without cutting anything they have currently.

In fact, those who currently have four or more services, and who expect to add new services, are even more likely to say they’ll keep everything they have (78%) without replacing anything.

A bit over half of TV consumers feel their bundle of TV services meets their needs “very well.” But the other half aren’t completely satisfied. With an average of nearly six TV sources at their disposal, nearly half feel their TV bundle meets their viewing needs only “somewhat well” (42%) or “not at all well” (6%).

Charter Widens Spectrum Pay-TV Subscriber Losses

Charter Communication’s trend avoiding pay-TV subscriber contraction appears to be coming to an end. The Spectrum TV provider April 30 reported residential video customers decreased by 156,000 in the first quarter (ended March 31), compared with a decrease of 70,000 in the first quarter of 2020, and 152,000 in the first quarter of 2019. Charter ended Q1 with 15.5 million Spectrum residential video customers.

Charter, the No. 3 pay-TV operator in the country, in 2015 was one of the first operators to launch a broadband-only service — dubbed Spectrum TV Plus — that included a free Roku 3 player priced at $12.99 a month.

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“We continue to execute well in a market environment that has not yet returned to normal,” CEO Tom Rutledge said in a statement. “We added 355,000 Internet customers in the first quarter, and 2 million over the last year, for year-over-year growth of 7.3%.”

Charter ended the quarter with 29.2 million broadband subscribers.

Comcast Loses 491,000 Pay-TV Subs in 90 Days, Expects ‘Elevated’ Sub Losses in Q2

Comcast Cable April 29 reported it lost 491,000 pay-TV subscribers in the first quarter (ended March 31). The tally, which included 87,000 business subscribers, topped the previous-year period loss of 409,000 subscribers. Comcast ended the quarter with 19.3 million subs — down 1.5 million subs from the same period in 2020.

The nation’s largest cable operator attributed the subscriber losses to ongoing consumer shifts to over-the-top video distribution — a trend that isn’t slowing down.

“We expect video losses in the second quarter [ended June 30] will remain elevated,” CEO Mike Cavanagh said on the fiscal call.

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That transition has become a boon to Comcast’s high-speed Internet business, a pre-requisite for streaming video. As one of the largest ISPs in the country, Comcast added 461,000 broadband subs, which was actually down from 477,000 additions in the previous-year period. The tally includes business subscribers.

Notably, video revenue of $5.6 billion was consistent with the prior-year period, reflecting a decrease in the number of residential video customers offset by an increase in average subscriber rates.

Report: Indian Pay-TV Market to Reach 134 Million Subs by 2025

India may be the future growth market for U.S. subscription streaming video services, but world’s second most-populous country isn’t abandoning linear pay-TV.

New data from Media Partners Asia suggests consumers in India may love streaming video, but they still love satellite and online TV. The research firm predicts that more than 96% of pay-TV households will be digitalized by 2025, with total subscribers growing from 127 million in 2020 to 134 million by 2025. Advertising and subscription revenue will top $12.3 billion.

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MPA projects satellite homes will increase by 10 million to more than 68 million in 2025. Cable’s market share will decline 10% to 46%, while online TV will grow slightly.

“Robust backend systems, the ability to offer consumers flexibility in choosing channel packages, and the exit of leading private channels helped the satellite sector grow,” Mihir Shah, VP at MPA, said in a statement.

The report suggested that until fiber-based broadband availability increases, satellite TV will be the key pay-TV driver. Total pay-TV revenue, including subscription and advertising, declined 10% in 2020 from 2019 to $8.9 billion as the economic downturn post-COVID eroded advertising.

As the pandemic threat declines and new content emerges, including live sports, consumer and economic sentiment will spearhead a sharp recovery in 2021, according to MPA. After a 25% contraction in 2020, pay-TV advertising will grow at 12% through 2025.

“We expect that more consolidation will play out in the broadcasting industry [forcing] incumbent broadcast networks to recalibrate existing channel portfolios,” Shah said. “The economics of less-popular channels and several niche channels are no longer viable. A new and less draconian regulatory framework will help revitalize content creation, while also helping to bolster pricing power for pay-TV platforms.”

 

The Week the Pay-TV Bundle Died

NEWS ANALYSIS — Fox Corp. and Disney-owned ESPN March 18 became the latest media companies to ink 11-year carriage agreements through 2033 with the National Football League that include landmark direct-to-consumer distribution via ad-supported VOD platform Tubi and SVOD service ESPN+, respectively.

When combined with the NFL’s other new contracts with ViacomCBS, NBCUniversal, Fox Corp., Amazon and Disney, the deals are reportedly worth a staggering $113 billion to the world’s biggest-revenue sports league. Despite slumping ratings and empty stadiums, live sports remains one of the most coveted prizes in the television business.

Why? The pay-TV market ended 2020 on record as the one of the worst for churn, or subscribers canceling the cable bundle — losing 1.4 million combined subs in Q4 alone. Cable operator WideOpenWest in February revealed it would lose 66% of its sub base in the next three years. Household subscriber penetration now stands at 60% — the lowest level since 1994.

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“The media industry just suffered from the worst year ever for cord cutting,” analyst firm MoffetNathanson wrote in a note.

To stanch the bleeding, media companies, whose assets include pay-TV, now covet over-the-top access to the NFL in order to gain a stronger digital foothold. And the NFL was willing to oblige — for a price.

ESPN+, which ended Disney’s most-recent fiscal period with 12 million subscribers, for the first time will stream a Saturday doubleheader during the season’s final weekend and one Sunday morning game.

“There are so many exciting new components, including Super Bowls and added playoff games, new end-of-season games with playoff implications, exclusive streaming games on ESPN+, scheduling flexibility and enhancements,”  Jimmy Pitaro, content chairman at ESPN, said in a statement. “It’s a wide-ranging agreement unlike any we’ve reached [previously] with the NFL.”

Fox will create an “NFL experience” on Tubi consisting of fee-based premiere VOD as well as condensed free ad-supported games throughout the NFL season.

“We are pleased to broaden our deal to include new digital rights that provide us with the flexibility to deliver NFL to customers in expanded and innovative ways,” Fox CEO Lachlan Murdoch said. “This long-term agreement ensures that we will continue to deliver the best in football coverage to our viewers while also strengthening and providing optionality to our business.”

The “optionality” to deliver live football to consumers via subscription streaming video and AVOD is relatively new in the U.S., and underscores the changing dynamics surrounding content distribution in the digital age.

“People want to watch it whenever it is convenient right now,” David Mowrey, VP of product management with Clearlap, which conducted a 2015 consumer survey gauging consumer interest paying for live sports streaming access, told CNET. “There’s still a lot of opportunity to create better experiences particularly around streaming sports.”

Industry data contends there was a peak 105 million pay-TV households in 2010, a tally that has been plummeting ever since. Despite the pandemic putting increased eyeballs in front of the television, the pay-TV market declined to less than 83 million households in 2020 — with new estimates dropping that number by another 10 million in two years.

As a result, live sports delivered on cable, satellite and telecom premium channels was seen as the industry’s Ace card against further subscriber churn, according to Mike Vorhaus with Magid Advisors.

“Sports is a major deterrent to cord cutting,” Vorhaus said in 2015 — a lifetime ago in the rapidly evolving digital media landscape.

“I think it’s 10 years, and there’ll be a total change of the guard,” Chris Long, a former DirecTV executive and now CEO of Cedar Park Entertainment, told Variety last summer. “At some point, people will make that decision of ‘I can get everything I want [in streaming]. I no longer need to have 180 channels that I only watch 12 of.'”

Indeed, sports’ move to digital marks another blow to the channel bundle business model that branched out into online TV (Dish Networks’ Sling TV, AT&T TV and ESPN+ Live TV) in an effort to thwart subscriber churn.

But with OTT video behemoth Netflix uninterested (thus far) in live sports, ViacomCBS’ streaming platform Paramount+, NBCUniversal’s Peacock and Amazon Prime Video jumped in the deep end this week, inking separate deals with the NFL, including Peacock and Prime Video being granted exclusive streaming access to “Sunday Night Football” and “Thursday Night Football,” respectively.

Michael Pachter, media analyst with Wedbush Securities in Los Angeles, said ad-supported SVOD/AVOD platforms give media companies dealing with declining pay-TV revenue the ability to increase revenue and offset live-sports carriage fees.

The analyst said Hulu, through its ad-supported options, generates as much as $10 per user per month. The lower tier subscription is limited in its ability to deliver ads (usually three to four minutes per hour), but the completely free versions can advertise as much as 10 to 12 minutes per hour.

“So, there is plenty of room to grow revenue for most of these guys,” Pachter said.

Roku: 2021 Grammy Awards Streaming Reach Increased, Viewership Decreased

After record low TV ratings in 2020, the 2021 Grammy Awards had nowhere to go but up, right? Right and wrong. New data from Roku ACR (Automatic Content Recognition) found that while this year’s show outperformed the 2021 Golden Globes and competing TV programs on March 14, there was a 16% drop in traditional linear-TV reach compared with 2020. Experts contend ACR data from smart TVs is the only way to get accurate measurement on what people are watching.

Roku estimates that the 2021 Grammy Awards reached approximately 52% more people 18+ via traditional linear TV compared with the 2021 Golden Globes.

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The annual music industry awards show saw the number of streaming channels distributing the event increase 28%, while total hours spent streaming decreased 22%. The difference indicates that viewers watched less of this year’s event compared to 2020.

Roku reported that migration from traditional linear-TV households to TV streaming increased 8% compared to last year. Streamers skewed younger, with a higher income relative to traditional linear-TV viewers for the 2021 Grammy Awards. Traditional linear TV-viewing homes were 19% more likely to contain someone 65 and older, compared with streamers. Streaming households were 5% more likely to contain someone 18 to 49 and 7% more likely to contain someone 25 to 34, compared to traditional linear TV homes.

Roku found that traditional linear-TV households were 15% more likely to have household income less than $25,000, while TV streaming households were 10% more likely to have household incomes higher than $100,000. Traditional linear-TV homes were also 50% more likely to be African-American and 14% more likely to be Hispanic.

Finally, TV streaming audiences got older, with the share of 18- to 34-year-olds who streamed the Grammys declining by 7%, while the share of 65 and older who streamed the show increased by 12%.

Roku said 16% of active ACR-enabled Roku TV households tuned in to the Grammy Awards via traditional linear TV; the next most-watched events of the day were college basketball games (9%) and “American Idol” (7%).

There was a high degree of overlap between those who viewed the Grammys on traditional linear TV and top network programs, with 46% of 2021 traditional linear-TV Grammy Awards viewers also watching “The Big Bang Theory” in the past two weeks.

Other traditional linear-TV programs with more than 40% overlap in the past two weeks include college basketball, “The Simpsons,” “The Voice,” and “Oprah With Meghan and Harry: A CBS Primetime Special.”

Compared to last year’s Grammys, 2021 traditional linear-TV viewership among users with an ACR-enabled Roku TV saw an increase in African-Americans while skewing slightly older and lower income overall. About 23% of traditional linear TV-viewing households were African-American, which represents a 26% increase from 2020.

In 2021, half of the traditional linear TV-viewing households contained someone age 18 to 34, and 77% contained someone 18 to 49. The share of viewing homes with someone 18 to 34 decreased by 9% since 2020, while the share of viewing households with someone 65+ increased 15% year-over-year. The percentage of homes with a household income less than $25,000 increased by 18%, while the percentage of homes with a household income exceeding $100,000 decreased 7% from a year ago.

Report: Major Pay-TV Providers Lost More Than 5.1 Million Subs in 2020

The pandemic has been no lifeline for linear pay-TV. New data from Leichtman Research Group found that the largest pay-TV providers in the U.S. — representing about 95% of the market — lost more than 5.1 million combined video subscribers in 2020, compared with a net loss of about 4.8 million in 2019.

Top pay-TV providers now account for about 81.3 million subscribers — with the top seven cable companies having 43.9 million video subscribers; satellite TV services about 21.8 million subs; top telephone with 7.9 million subs, and the top Internet-delivered pay-TV services with 7.7 million subs.

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Leichtman found that satellite TV services narrowed sub losses to about 3.4 million subs in 2020, compared with a loss of about 3.7 million subs in 2019. The top seven cable companies lost more than 1.9 million video subs, compared with about 1.56 million subs lost in 2019.

Top telephone companies lost about 405,000 video subs, compared with a loss of about 630,000 subs in 2019. Online TV services such as Hulu+Live TV, Sling TV, AT&T TV Now and fuboTV added about 640,000 subs compared to more than one million  in 2019.

Traditional pay-TV services lost about 5.8 million subs, compared with a net loss of about 5.9 million in 2019. AT&T had a net loss of about 3.26 million across DirecTV, AT&T U-verse, AT&T TV, and AT&T TV Now compared to a net loss of about 4 million subs in 2019. AT&T “Premium TV” services lost 15.3% of subs compared to a 4.6% loss among all other traditional pay-TV services.

“Pay-TV losses were slightly higher than in 2019, and more than in any previous year,” analyst Bruce Leichtman said in a statement.  “Overall, the top pay-TV providers lost 5.9% of subs in 2020, compared to 5.2% in 2019.”

Pay-TV Providers Subscribers at end of 4Q 2020 Net Adds in 2020
Cable Companies
Comcast 19.85 million (1.4 million)
Charter 16.2 million 56,000
Cox 3.65 million (215,000)
Altice 2.96 million (236,800)
Mediacom 643,000 (67,000)
Atlantic Broadband 318,387 1,287
Cable One 261,000 (46,000)
Total Top Cable 43.9 million (1.91 million)
Satellite Services
DirecTV 13 million (3 million)
Dish Network 8.8 million (408,000)
Total Satellite 21.8 million (3.44 million)
Phone Companies
Verizon FiOS 3.93 million (302,000)
AT&T U-verse/AT&T TV 3.5 million 42,000
Frontier 485,000 (146,000)
Total Top Phone 7.9 million (406,000)
Online TV
Hulu + Live TV 4 million 800,000
Sling TV 2.47 million (118,000)
AT&T TV Now 656,000 (270,000)
fuboTV 547,880 231,880
Total Online TV 7.7 million 643,880
Total Top Providers 81.3 million (5.1 million)
Sources: The Companies and Leichtman Research Group, Inc.

Report: Pay-TV Subs Spend as Much on SVOD as Cord-Cutters

A longtime marketing advantage of over-the-top video was its cost-effectiveness to traditional pay-TV bundle. As SVOD services proliferate, the combined cost of services is narrowing the pay-TV divide, suggesting relative cost savings moot. Notably, new data from Cordcutting.com finds that pay-TV subs are spending as much on SVOD as cord-cutters — around $45 monthly — while maintaining linear-TV access.

Thanks to comparable streaming budgets, cord cutting savings remain clear. Pay-TV subscribers spend an average of $168 a month on TV entertainment and broadband, roughly double the cord-cutter average of $86 a month.

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Notably, cable and satellite TV customers subscribe to an average of 4.4 streaming services, which is greater than the 4.1 average for cord-cutters. Indeed, pay-TV subs spend an average of $45 a month on streaming, which is greater than the $37 a month spent by cord-cutters.

“Our findings suggest that convenience and other non-financial factors in streaming aren’t as important to the cord-cutting trend as might be imagined,” read the report. “But, conversely, the high levels of streaming spending among cord-havers suggest that convenience, original content, and other factors are more important — not to the narrow world of cord-cutting, but to the broader world of TV entertainment.”

Parks: 55% of Pay-TV Households Say Live Sports Key to Keeping Service

Live sports remains a key driver in pay-TV as subscribers’ love for football, basketball, baseball and ice hockey outweighs dropping the more-expensive home entertainment distribution channel with over-the-top video. New research from Parks Associates finds 55% of pay-TV households in the U.S. report availability of live sports is important in their decision to keep their pay-TV service.

Major pay-TV operators Comcast Cable, AT&T U-verse, DirecTV, Disneh Network and Fios Video lost more than 5.6 million combined video subscribers in 2020. Charter Spectrum added 19,000 pay-TV subs.

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“The churn rate for pay-TV services continues to trend significantly lower than the rate for OTT services,” Steve Nason, research director of Parks Associates, said in a statement. “This is fortunate given the lack of live sports in the early stages of the COVID-19 pandemic. Over the past year, churn rates for OTT and [onlione TV] services both declined as consumers turn more and more to online video sources for their entertainment.”