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State of the Screens

What Does Pay TV’s “Less Bad” Q3 Mean For Cord Cutting?

By December 1, 2020No Comments

QoQ change in pay-TV subscribers:
1)
 Traditional pay-TV – ↓ 1.1M
2) 
Streaming pay-TV – ↑ 1.6M
3) Total pay-TV – ↑ 485K

Traditional pay-TV subscriptions (YoY growth):
1) 
2018-Q3 – 86.1M
2) 
2019-Q3 – 81.0M (↓ 6%)
3) 2020-Q3 – 74.9M (↓ 8%)

Streaming pay-TV subscriptions (YoY growth):
1) 
2018-Q3 – 6.0M
2) 
2019-Q3 – 8.1M (↑ 35%)
3) 2020-Q3 – 11.5M (↑ 41%)

Total pay-TV subscriptions (YoY growth):
1) 
2018-Q3 – 92.1M
2) 
2019-Q3 – 89.1M (↓ 3%)
3) 2020-Q3 – 89.6M (↓ 3%)

Subscription combinations, according to Leichtman Research Group:
1) SVOD + pay-TV – 60%
2) SVOD only – 20%
3) Pay-TV only – 14%
4) Neither SVOD nor pay-TV – 6%

Yikes: Network execs expect traditional pay-TV households to drop to 50M (↓ 25M) by 2025.

Quick math: 25M households leaving pay-TV = $25B in lost revenue from subscriptions alone!

Big question #1: Can streaming make up the difference?

Quick answer: Unclear.  Doug Shapiro breaks down the economics of shifting from traditional pay-TV to streaming in a must-read article.

Why this matters: Traditional pay-TV subscriptions are declining at an increasing rate, and revenue from streaming is not offsetting (yet).

Share of national video revenue:
1) Traditional TV – $100B (84%)
2) Streaming TV – $19B (16%)
3) Total TV – $119B

Quote from Doug Shapiro – Former Chief Strategy Officer @ Turner Broadcasting:
“Pay TV is more than a bundle; it is a bundle of a bundle of bundle of a bundle. TV episodes are bundled into series; series are bundled into networks; networks are bundled into a pay TV package; and the pay TV package itself is a bundle of content and distribution (at least when it is provided by a facilities-based distributor like Comcast or DirecTV). Thanks largely to the advent of streaming, all of these components can be purchased separately today. What is effectively at work right now is the unbundling of the TV bundle.”

Big question #2: Which networks are at greatest risk in the shift to streaming?

Quick answer: The networks with the highest cost compared to the share of consumer attention.

More: The Rise And Fall Of Cable Television

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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