US PAY TV SUBS ARE EXPECTED TO DECLINE BY 20% BY 2023

Pay TV subscriptions in the United States are expected to decline by 20% by 2023, according to insights from analysts at media research firm Broadcast Intelligence, published on Advanced Television.

As the SVOD market continues to grow, US pay TV subscription declines will accelerate compared to the past decade, marking the continuation of an irreversible trend that is reshaping the United States television industry.

Broadcast Intelligence’s report, titled “Pay-TV’s future in an on-demand world - US Market Edition”, analyses the recent performance of the top eight pay TV providers in the United States. It also predicts that US traditional pay TV subscriptions will drop, reaching 62 million by the end of 2023, down from 77 million in 2019.

Over the past decade, pay TV subscriptions in the United States have slowly started to decline, as new and innovative content aggregation and distribution models – most notably SVOD – grew popular among consumers. Between 2011 and 2019, the number of SVOD subscriptions in the country has grown by 22 million to 193 million, while pay TV subscriptions have declined from 95 million to 77 million.

“Pay TV is still playing a fundamental role in the TV ecosystem in the United States. More than 70% of US households subscribe to pay TV, and linear viewing still accounts for the vast majority of TV consumption for the average American. TV also remains the largest source of revenue for most of the platform providers, despite broadband subscriptions having surpassed TV subscriptions around the middle of the decade. However, it is hard to see a way for platform providers to reverse the declining trend that has affected the market in the past decade,”  insights analyst Jack Genovese said.

The launch of vMVPDs in the second half of the decade aimed to regain some of the pay TV users that were lost. Broadcast Intelligence analysts estimate the vMVPD market to count 7 million subscriptions in 2019. Although they expect vMVPDs to continue to grow by 2023, reaching 13 million subscriptions in that year, this growth will not make up for the fall in traditional pay TV subscriptions expected over the same period.

Moreover, Broadcast Intelligence estimates that, by 2023, pay TV revenues will fall by 18% compared to 2019. The company expects ARPU growth to slow down significantly compared to the past decade, due to a combination of more intense competition from cheaper services and pay TV customers shifting to cheaper bundles in order to manage their video expenditure.

“As the role of content continues to evolve to serve new strategic imperatives, traditional platform providers will struggle to compete to provide customers with a compelling content offering for a cheap price. The key to surviving in these difficult circumstances will be to increase the flexibility of the content offering and managing the content cost bill in a way that prioritises customers’ core needs,”  Genovese added.