New forecasts from GlobalData suggest that the decline of traditional pay TV video services is only going to get worse, with only 32% of U.S. homes having one in 2028. That marks a further decline from the 42% penetration rate in 2023 and a steep decline from 2009 and 2010 when pay TV penetration exceeded 85%.
The GlobalData study explained that the subscription declines reflected the fact that more viewers will be cutting the cord and shifting over to over-the-top (OTT) streaming services.
Complicating matters are the younger viewers who have never even subscribed to a traditional pay TV service and likely never will. In addition sports rights, which had traditionally kept some viewers in the pay TV universe, are increasingly shifting over to streaming.
GlobalData’s latest report, “United States Pay-TV Forecast,” also predicts that the total linear U.S. pay-TV subscriptions will fall below 50 million by 2025, as viewers continue turning away from cable TV, satellite TV, and broadband-delivered IPTV subscriptions.
Meanwhile, viewers will be spending more time on ad-supported streaming video (AVOD) and free ad-supported streaming TV (FAST) services like The Roku Channel, Tubi, Peacock, and Pluto TV; virtual multichannel video programming distributors (vMVPDs) like YouTube TV, Hulu + Live TV, and Sling TV; as well as streaming video on demand (SVOD) services like Netflix and Amazon Prime Video, either with or without ads, the researchers said.
“Younger generations tend to adopt new technologies and services like video streaming, but an additional element of the cord-nevers is the emergence of the ‘generation rent’ phenomenon,” explained Jesús Romo, principal analyst at GlobalData. “Younger consumers who are priced out of the housing market and rent for longer periods may prefer more flexible entertainment options that do not require a physical installation, are generally unbundled, and allow them to cancel and resubscribe.”
Tammy Parker, principal analyst at GlobalData added that “sports programming has been the chief redeeming feature for traditional pay TV services, which is still true to a point, but streaming video providers are increasingly encroaching on that sacrosanct relationship, with certain live sports events having already migrated to streaming platforms. For example, viewers who want to watch NFL Thursday Night Football or Major League Soccer’s MLS Season Pass need to turn to Amazon Prime or Apple TV+, respectively. Disney’s expected launch of a standalone ESPN streaming service will further encourage a viewer exodus from traditional linear TV providers.”
As traditional pay TV service providers continue to lose customers, cable’s share of that shrinking market will grow in the coming years; cable is expected to control 69% of the U.S. pay TV market in 2028, up from 64% this year.
This is largely due to the satellite pay TV providers’ more rapidly shrinking customer bases, the study found. Although U.S. cable’s subscriber rolls will shrink at a CAGR of -3% from this year through 2028, satellite-based providers will see a decline of -6% CAGR, and IPTV providers will fare even worse, with a CAGR of -12%.
“Pay TV subscription revenues are taking a hit as well," Parker concluded. "Though price increases have helped cable and satellite TV providers grow their average revenue per subscriber (ARPS), traditional pay TV revenue is on the decline. Total annual US pay TV subscription revenue is expected to plummet from $80.8 billion in 2023 to less than $63.6 billion in 2028, registering a declining CAGR of nearly -5%.”
