The number of pay TV homes will drop to 73.2 million households by 2024 from 83 million at the end of this year, according to analysts Craig Moffett and Michael Nathanson of MoffettNathanson Research.

In a report issued Tuesday, the analysts said the cord-cutting will continue at a 4% to 5% annual pace, even though sports viewing appears to be rebounding. 

There were 93 million pay TV households in the third quarter of 2019, with 83.5 million with traditional video distributors and 9.5 million on virtual multichannel video programming distributors (MVPDs). They accounted for 78% of homes, versus 26.4 million non-pay TV homes, or 22%. 

Also: Cord-Cutting Getting Worse in 2021-22: S&P Report

MoffettNathanson said that by the third quarter of 2021, there were just 84 million pay TV homes, 71 million with traditional distributors and 13 million via vMVPDs. Non-pay TV homes grew to 39 million, or 32%. By year-end, pay TV households will be down to 83 million, the analysts said.

By 2024, MoffettNathanson said, the number of traditional pay TV homes will be equal to the number of non-pay TV homes. 

In their report, the analysts attempted to figure out what the absolute floor was for pay TV subscribers. Sports fans are among those most likely to keep pay TV. Viewers in about 58 million households describe themselves as sports fans who watch at least one event per month.

The least likely cord-cutters are households with members who are both sports fans and live news viewers. Looking at that group puts the floor at about 53 million, the report said.

“We believe the 18 million pay TV subscribers who are regular news viewers (but do not watch sports) and the 7 million who don’t watch sports or news are at risk for further cord-cutting,” the report said.

MoffettNathanson partnered with consulting firm Altman Solon on a study of consumer interest in sports. 

The number of households that consider themselves regular sports viewers has increased from 2019, while the number of traditional pay TV subscribers has continued to decline. 

“Sports fans are not abandoning traditional pay TV at all,” the report said. ”In fact, we estimate the number of regular sports viewers within the linear ecosystem (traditional pay TV or vMVPDs) has increased by over 2 million to 58.4 million in 3Q 2021 from 55.8 million 3Q 2019. 

“We estimate that the drop in linear TV subscribers has come exclusively from people who do not view sports, and the increase in sports viewership has come primarily from people who either have cut the cord or never had a pay TV subscription in the first place,” MoffettNathanson added.

While sports is a bulwark for pay TV, some sports are moving to streaming, the report notes.

“We expect sports leagues and media owners will become more aggressive in moving sports content over-the-top as it appears to be driving incremental reach without cannibalizing sports,” the report said. "We believe moving sports content to DTC services is a delicate balance, especially if major sports leagues like the NFL decide to become more open with their streaming partnerships.”

This could change the floor for pay TV. “If more sports content moves OTT, then perhaps some casual sports viewers are also at risk for further cord-cutting,” MoffettNathanson said. ■

Pay TV subscriber rolls fell by 3.7% in 2017 according to industry researcher Kagan, fueled by larger than expected losses at satellite TV providers and accelerated declines at cable operators.

Total pay TV subscribers fell to 94 million in 2017. Including virtual MVPDs like Sling TV and DirecTV Now boosts the total count to 97.3 million, according to Kagan, a unit of S&P Global Intelligence.  Combined Kagan estimated that cable, satellite and telco subscriptions were down by 7.4 million customers from their peak in 2012.

Cable operators lost 986,411 video subscribers in 2017, more than twice their 2016 drop. That, according to  Kagan, broke the sector’s three-year streak of decelerating video subscriber losses.

Telcos slowed their net subscriber losses for a third consecutive quarter. The sector shed 903,262 subscribers overall in 2017 to end the year at 10.6 million.

The satellite TV sector was down nearly 1.7 million subscribers in 2017, its biggest annual loss on record, as DirecTV joined Dish Network in posting traditional subscriber declines.

Pay TV subscriber rolls continued to dwindle in the seasonally weak second quarter, as losses from telco-TV service providers continued to weigh heavily on the sector.

Meanwhile, continued improvements by cable operators and declines at content providers suggest a widening gap between cord-cutters and cord-shavers.

The pay TV industry lost 757,000 basic video subscribers in the second quarter, an increase from the 683,000 it lost in the same period last year, according to MoffettNathanson principal and senior analyst Craig Moffett. Including estimates from Dish Network’s Sling TV over-the-top service, the sector lost 708,000 subscribers in 2016 and 613,000 customers in 2015.

Cable continued to temper its customer declines: It shed 242,000 video customers in the period, nearly half the 404,000 it lost in the prior year. But telco-TV losses increased exponentially at 526,000 for the quarter, compared to a gain of 5,000 in the prior year.

Satellite-TV providers continued on their roller coaster ride, adding 12,000 in the period compared to a loss of 284,000 in the prior year. Exactly where those customers are going is a little murkier. There has generally been a straight line from multichannel video programming distributor (MVPD) losses to cord-cutting, but that path has become a little less clear over the past several quarters.

The Walt Disney Co. has shed more than 4 million subscribers over the past year, while content companies such as Discovery Communications and Time Warner Inc. have estimated subscriber losses of about 2%. Those figures are based on Nielsen data that doesn’t take into account over-the-top distributors (which could number about 800,000 subscribers via Moffett’s estimates) and skinny bundles from traditional and non-traditional sources.

“[H]ere’s what we do know. Cable is doing well. The telcos are doing badly. And satellite is mixed,” Moffett wrote in a note to clients.

BTIG media analyst Rich Greenfield, who has for years warned that OTT services are a real threat to the traditional MVPD subscriber base, sees the Q2 results as more evidence that the traditional pay TV model is eroding.

Though he doesn’t expect a wholesale collapse anytime soon, Greenfield wrote in a blog post that he sees the pay TV model getting slowly chipped away.

“Just a few years ago, the industry was adding video subs at a 1-2% rate; now the industry is losing 2% through cutting/shaving, not to mention the growing pressure from cord-nevers,” he wrote. Data suggests annual losses of 3, 4 or even 5% could become reality in the next few years, he added.

“It may not happen, but it certainly feels like the big TV bundle is becoming less and less important to consumers, given a poor price/value equation,” he wrote.

Moffett said telco TV’s erosion is due partly to the “perfect storm” of a strike at Verizon Communications, Frontier Communications’s initial problems in transitioning former Fios TV markets it bought earlier this year and AT&T’s conversion of U-verse TV subscribers to DirecTV.

Even considering those developments, telco TV’s reversal of fortune is extraordinary. Moffett noted that telco TV subscriptions have gone from a 6.1% increase to a 9.1% decline in just one year.

Cable operators continued to build on the momentum of past quarters. Comcast improved its video losses in Q2 to just 4,000 (compared to a loss of 69,000 in the prior year — its best second quarter in more than a decade), while Charter Communications lost 152,000 video customers in the period, better than the 170,000 it shed in Q2 2015. Cablevision, now part of Altice USA, lost just 2,000 subscribers for its best Q2 in four years.

“Can cable’s relative position get any better?” Morgan Stanley media analyst Ben Swinburne asked in a note to clients. He pointed to Charter’s improvements, adding that more are expected.

“[W]e think Charter’s best market share days remain ahead of it,” Swinburne wrote.

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said he believes cable’s momentum will continue at the expense of the telcos. “In the end, cable simply has a better mousetrap, which will become even more apparent in ’17 when cable inexpensively upgrades its network for DOCSIS 3.1 and its 1 [Gigabit-per-second]-plus potential download speeds,” he wrote in a note to clients.