Pay TV Losses Could Jump to 5 Million Households per Year

We’ve seen a wide range of recent forecasts regarding cord cutting and the impact on traditional pay TV. According to a new survey from RBC Capital Markets, only 55 percent of respondents said they would continue their pay-TV subscriptions. While 2016 saw a loss of 2 million subscribers, a future increase exceeding 5 million per year “does not seem impossible,” wrote RBC analyst Steven Cahall. “The RBC survey found that 21 percent of current cable, satellite or telco TV customers were considering switching to a lower-cost virtual pay-TV service,” reports Variety, “like Hulu with Live TV, Sling TV or DirecTV Now.”

RBC believes that distributors such as Hulu and YouTube TV will continue to grow while cannibalizing the current pay-TV customer base. About 15 percent of the market for vMVPDs (virtual multichannel video programming distributors) “will come from legacy cable and satellite subs, with 10 percent from ‘cord-never’ broadband-only households,” notes Variety.

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According to SNL Kagan, there are currently 86 million pay-TV households in the U.S.

Earlier this month, eMarketer reduced its forecast for TV ad spending while significantly upping its 2017 estimate for cord cutting.

“This year, there will be 22.2 million cord-cutters ages 18 and older, a figure up 33.2 percent over 2016,” explains eMarketer. The original 2017 forecast suggested 15.4 million. “The number of U.S. adult cord nevers will grow 5.8 percent this year to 34.4 million.

“While they don’t necessarily save consumers much money, [Internet pay-TV services] do provide more flexibility on cost due to the month-to-month arrangement, have lower switching costs between similar services and avoid much-hated ‘hidden fees’ like set-top box rental and [regional sports networks],” Cahall wrote. “We broadly conclude that customers feel like they ‘get what they pay for’ on [virtual pay-TV services] vs. a perceived mistrust about the true cost of cable.”