Cable, satellite, and telecom pay TV providers should expect one of the worst years ever for cord cutting, according to eMarketer.
The data and research firm predicts that 6.6 million households will cancel their pay TV subscriptions this year and by the end of 2020, 31.2 million U.S. households in aggregate will have cut the cord. That will leave 77.6 million U.S. households with cable, satellite, or telecom TV packages, down 7.5% year-over-year, which eMarketer said will be the biggest such drop ever.
“Consumers are choosing to cut the cord because of high prices, especially compared with streaming alternatives,” said eMarketer forecasting analyst at Insider Intelligence Eric Haggstrom in a statement. “The loss of live sports in H1 2020 contributed to further declines. While sports have returned, people will not return to their old cable or satellite plans.”
MoffettNathanson predicts a similar rate of decline for pay TV households. The analyst firm estimated that the traditional pay TV ecosystem is declining at a rate between 7.7% and 8.3% per year and that, at that rate, the entire pay TV business would disappear in 12 years.
By the end of 2024, eMarketer expects that fewer than half of U.S. households will subscribe to a pay TV service. The firm predicts that the number of U.S. cord-cutter households will grow to 46.6 million by 2024.
eMarketer also anticipates that pay TV services will see significant declines in ad spending. Total spend will drop 15% this year to $60 billion, the lowest the industry has seen since 2011, and will remain below pre-pandemic levels through at least 2024.
“While TV ad spending will rebound in 2021 with the broader economy, it will never return to pre-pandemic levels,” Haggstrom said. “Given trends in cord-cutting, audience erosion, and growth in streaming video, more ad dollars will shift from TV to digital video in the future.”