Evercore: Cord-Cutting Slow Down Expected in 2020

NEW YORK—The rise of cord-cutting may be reaching its end, according to a 2020 outlook report from Evercore ISI. After years of an increasing number of consumers dropping their traditional pay-TV services, 2020 will see those numbers dipping.

After a reported 5.45 million lost subscribers in 2019, Evercore sees the number of consumers cutting their pay-TV plans to drop to 4.8 million. This is the first overall decrease in cord-cutters since 2015.

A major contributing factor to this fact, per Everscore, is that many of those who will have a traditional pay-TV subscription are committed to their services because of what they offer in sports and new content. Of 600 surveyed pay-TV customers, two-thirds of respondents said they are willing to pay at least $50/month for sports and news channels alone.

There are a number other factors that are contributing to the cord-cutting environment, including vMVPDs, SVODs and others.

Everscore found that vMVPD subscriber growth has slowed, with the category adding less than 1 million subscribers overall in 2019; this follows net additions of 2.5 million in both 2017 and 2018. In addition, the vMVPD market lost one of its outlets with the shutdown of PlayStation Vue. Everscore contributes this slowdown to lower promotional discounts, higher list prices and a possible increase in password sharing.

Similarly, another weak spot for pay-TV subscriptions that occurred in 2019 could be due to a promotional issue with DirecTV. As part of an apparent “purging” strategy, DirecTV has discontinued a two-year price lock promotion that may have inflated its numbers between 2018 and 2019 by nearly 1.4 million. The end of this promotion could have resulted in the loss of 700,000 video subscribers in 2018 and 2019, each. Those high cut rates could go away now that the promotion is over.

On the other side, SVOD is expected to experience a growth acceleration in 2020 thanks to the launch of new services, the scaling of young services and the continued growth of mature services. Apple TV+ and Disney+ launched in 2019 and are expected to see continued growth, while HBO Max and Peacock are slated for 2020 launches and to garner a fair amount of interest. There could be as many as 30 million incremental subscribers in the U.S. for these services in 2020, per Everscore.

For more information on this report, visit www.evercore.com