NEW YORK—Pay-TV, like so many other industries at this point in time, is taking a significant hit in part because of the coronavirus pandemic. In MoffettNathanson’s “Q1 2020 Cord-Cutting Monitor” report, the data shows that the first quarter of 2020 brought upon a record number of pay-TV subscription losses.

Traditional pay-TV subscriptions fell by 1.8 million in Q1, the worst quarterly results on record, according to MoffettNathanson. This also brought the annual rate of decline to -7.6%, another record.

Satellite TV was hit the hardest, with the third consecutive quarter of more than 1 million subscriptions lost, resulting in an annual rate of decline of -14.3%. MoffettNathanson says that number would likely be worse if its numbers were able to include lost bars, restaurants and hotels that temporarily suspended Dish Network subscriptions. Cable, meanwhile, saw about 600,000 subscribers cut the cord, bringing its annual growth to -4%, another record low.

The 63% of households with pay-TV services is the lowest it has been since 1995. MoffettNathanson also says that are currently as many non-subscribing households (46 million) as there were pay-TV subscribers in 1988.

The unemployment impact of COVID-19 is definitely contributing to these statistics, but so is the loss of live sports content on the air. As a result, MoffettNathanson projects that things will get worse in Q2.

It’s not just traditional pay-TV subscriptions seeing significant losses. MoffettNathanson found that around 341,000 subscribers dropped vMVPD services in Q1. AT&T TV Now, Sling TV and fuboTV are all expected to have lost subscribers, according to MoffettNathanson. Services that have seen growth have been small—Hulu Live TV has added about 100,000 subscribers, a deceleration, and YouTube TV, which MoffettNathanson says is the fastest growing vMVPD service, was unable to make a dent in the losses.

A huge part of this is that when Sony’s PlayStation Vue service shut down at the end of January, MoffettNathanson reports that its nearly 500,000 subscribers did not add a new service to replace it.

Total pay-TV subscriptions, both traditional and vMVPD, are decreasing at a rate of 5.3% per year.

Many companies have or are planning to launch streaming services that are gaining popularity among viewers, even in these current times. But, as MoffettNathanson puts it, “it is increasingly clear that as consumers climb into these lifeboats, they are leaving the (sinking) motherships behind.” MoffettNathanson does not believe that these new streaming services will be able to match the profitability that traditional and vMVPD services would have.

“When one’s ‘last line of defense’ (vMVPDs) has been breached, it is not unreasonable to ask … has the war now been lost?,” MoffettNathanson’s report reads. “What’s at stake is nothing less than the viability of the traditional cable network model writ large.”

CHESEAUX, Switzerland & PHOENIX—Now in its fourth year, the Pay-TV Innovation Forum, organized by NAGRA and MTM, has released its global findings based off of industry executives in North America, Europe, Asia Pacific and Latin America. The Forum focused on a number of key industry trends, including OTT services, next-generation content aggregation, piracy and pay-TV digital transformation, among others.

On the surface it seems that pay-TV and OTT services are opposing entities, but a majority of industry executives that took part in the forum actually see OTT technology having a positive impact on their business. Seventy percent of those polled shared this view, while 21% see a negative impact. While new streaming services like Apple TV+ and Disney+ will soon be rolled out, they are not seen as a significant threat to pay-TV and can actually be an opportunity to adopt a super-aggregator model for these services. Super-aggregator platforms could emerge within the next five years, according to 77% of executives. However, combined services—like what Disney will offer with a bundle of Disney+, Hulu and ESPN+—could prove as a significant competitor.

However, pay-TV execs still recognize that certain things have to change in their industry to appease customers, and one such solution could be the restructuring of traditional pay-TV packages. Over the next decade, 91% of respondents believe innovation in product pricing and packaging will be key to attracting and retaining customers, especially the next generation of consumers.

One thing that they don’t expect to change, however, is the importance of keeping tier-one sports on pay-TV. OTT services are beginning to challenge pay-TV’s sports dominance with things like OTT aggregators and direct-to-consumer services from leagues, clubs and broadcasters. A total of 85% of respondents believe OTT sports streaming will increase in their country from by 2024. As a result, 93% see sport streaming services as valuable partners for pay-TV providers seeking to aggregate content and services.

Content piracy is still seen as a “challenge” to pay-TV businesses, according to 60% of the forum, with 65% believing that piracy has gotten worse or stayed the same in their countries, with nearly half believing piracy pressures will increase in the next five years. To combat piracy, the execs believe it will take a combination improvements to pay-TV offerings, deeper collaboration across the industry and new technology.

It was also widely believed among respondents (79%) that to compete, pay-TV will need to invest in areas like big data analytics, automation, artificial intelligence and machine learning. They mostly believe that they can be doing more to invest in these data and analytics capabilities.

“This year’s findings illustrate the ongoing need for transformation, as the pace of change across the industry accelerates. The wave of new OTT offerings entering the U.S. market are causing considerable anxiety, but the industry remains confident that it can continue to thrive,” said Jon Watts, managing partner for MTM. “Pay-TV providers will have to continue to innovate, developing better offerings and services that deliver what consumers are looking for. Faced with ever-growing competition, increasing fragmentation and fast-paced innovation, pay-TV businesses will have to decide which opportunities to pursue and which investments to prioritize.”

Find the full report here.