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The Cost of OTT: 18 Million Pay TV Subs Lost, 2014-2020

Netflix
(Image credit: Netflix)

ADDISON, Texas—A new research report from Parks Associates highlights just how costly the rise of OTT and streaming media has been to the TV industry, with US pay TV operators losing 18 million subs between 2014 and 2020. 

In 2020 alone, over seven million homes dropped their pay TV services, Parks noted. 

The industry report "Modern Broadband: Shifting Landscape” also predicts that traditional pay TV subs will continue to decline, slumping to about 54 million by 2024. 

The declines have reduced income from carriage fees and retransmission consent deals, trends that have further accelerated the move to streaming media by programmers and broadcasters. 

The shift has also boosted sub counts for virtual MVPDs, though these increases have not kept pace with losses in traditional subs. 

“Online pay TV service from virtual MVPDs, players that target the general population instead of offering services to a specific geographic footprint, grew by an estimated three million,” said Kristen Hanich, senior analyst at Parks Associates. “vMVPDs overall have grown to represent an increasingly large percentage of the pay TV market — accounting for 16% of US pay TV subscriptions in 2020.”

In the US market, vMVPDs represented the only segment of the pay TV space to experience growth during the COVID-19 pandemic. Parks Associates estimates that by the year 2024, the traditional pay TV subscriber base will decline to just 53 million US households — while vMVPDs will increase to over 23 million.

Internet service providers and others operating in the pay TV space have been seeking alternatives to traditional pay TV in their consumer services arsenal, the research company reported. 

Cable operators in the United States have had some success in encouraging new bundling by launching Wi-Fi-first MVNO services, primarily running on Verizon’s network. In Parks Associates’ Q1 2021 survey, 4% of US broadband households reported subscribing to Comcast Xfinity Mobile, Spectrum Mobile, or Altice Mobile — making them some of the largest players in the MVNO space.

“US ISPs collectively have over 110 million residential and small business internet subscriptions as of Q1 2021,” Hanich said. “The standalone broadband market will continue to grow, increasing pressure on these service providers to find the next combination of services that best leverages this massive subscriber base.”