Millions Flee Pay-TV; Revenues Slide, Say Researchers

ALEXANDRIA, VA.—Pay-TV revenue, household penetration and subscriptions in the U.S. are down and things don’t appear as if they will improve anytime soon, according to reports from three separate analysts.

A tally released this month by nScreenMedia finds that U.S. cable, satellite and telco TV services lost 3.5 million subscribers last year. Overall, 2017 proved to be the worst year ever for the traditional pay television industry, it said.

Another newly released report from Digital TV Research paints a similarly gloomy picture. According to its new North American Pay TV Forecast, the total number of U.S. pay TV subscribers dropped to 90.35 million, down 10 million from the industry’s high mark of 100.34 million in 2012. U.S. pay-TV household penetration is likewise on a downward trajectory. In 2013, 87.6 percent of households subscribed to pay TV, but by 2023 that figure is expected to decline to 66.7 percent.

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New data from Leichtman Research Group also shows rough seas for pay-TV, but smaller subscription declines. According to the research organization, the largest U.S. pay-TV providers lost nearly 1.5 million net video subscribers last year compared with a pro forma loss of about 760,000 in 2016—a 1.6 percent subscriber decline last year compared to a 0.8 percent drop in 2016.

"The pay-TV market saw net losses increase in 2017 and the continuation of a share shift from traditional services to newer internet-delivered services," said Bruce Leichtman, president and principal analyst for Leichtman Research Group.

According to Leichtman, the number of subscribers to the top pay-TV providers in the U.S. is 92.2 million. The top six cable companies accounted for 48.1 million video subscribers; satellite TV providers have 31.5 million; the top telephone companies have 9.2 million; and the top internet-delivered pay-TV services have about 3.4 million. A Leichtman chart itemizes the number of subscribers for top cable, satellite, phone (IPTV) and internet-delivered (vMVPD) TV as of the end of Q4 2017 as well as net subscriber additions in 2017.

The declines are taking a toll on revenue. In 2015, U.S. pay-TV revenues peaked at $101.71 billion but will decline by 26 percent to $75.1 billion in 2023, according to Digital TV Research’s new forecast. The slide in cable TV revenue, which began after its 2010 peak of $54.11 billion, will continue. Revenues will reach $36.75 billion in 2023, a drop of about 33 percent. Total subscribers will also drop by about 12 million from 2010 to 2023, the forecast said.

Satellite and IPTV services will suffer declines as well, although a good part of the decline is due to some operators, such as AT&T, shifting subscribers to aligned platforms. For instance, nScreen Media reports AT&T U-verse lost 17 percent of its subscriber base, which is largely due to the effort of the company to retire the service and direct subscribers to DIRECTV and DIRECTV Now. IPTV revenues reached their zenith in 2015 at $9.6 billion; however, they are expect to decline to $4.77 billion in 2013, the forecast said. In 2014, IPTV subscriptions topped at 12 million, but are forecast to decline to 6.26 million in 2023.

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Satellite pay-TV revenues are projected to fall 16 percent from $39.78 billion in 2017 to $33.61 billion in 2023. The number of subscribers, which dropped 3 million last year, will decline by another 4 million between 2017 and 2023, the forecast said. Both DISH with its vMVPD Sling TV and DIRECTV Now are having an impact on these numbers.

"Satellite TV services, DIRECTV and DISH TV, had more combined net losses in 2017 than in any previous year, yet these losses were offset by gains from their internet-delivered flanker brands, DIRECTV NOW and Sling TV,” said Leichtman.

While helpful, the growth of such virtual MVPDs won’t entirely make up for the drop off in revenue and subscribers, added Simon Murray, principal analyst at Digital TV Research.

Phil Kurz

Phil Kurz is a contributing editor to TV Tech. He has written about TV and video technology for more than 30 years and served as editor of three leading industry magazines. He earned a Bachelor of Journalism and a Master’s Degree in Journalism from the University of Missouri-Columbia School of Journalism.