The future of residential pay-TV services will be wrought from an intensifying clash between virtual operators such as Sling TV and DirecTV Now, and traditional cable, satellite, and telco pay-TV providers according to a report from research and advisory firm The Diffusion Group (TDG). Unfortunately, the battle will be for a larger slice of a declining market.

Generally, TDG expects that the penetration of live multi-channel pay-TV services will decline from 85 per cent of US households in 2017 to 79 per cent in 2030. While statistically a loss of only 7 per cent, it nonetheless illustrates the ongoing secular decline of a once healthy market space. TDG predicts that, by 2030, roughly 30 million US households will live without an MVPD service of any kind, be it virtual or legacy.

During this time, legacy MVPDs will experience considerable subscriber losses, due not only to long-term industry trends but also growing competition from virtual pay-TV providers. Consequently, legacy pay-TV penetration will fall from 81 per cent of US households in 2017 to 60 per cent in 2030, down 26 per cent. At the same time, virtual pay-TV penetration will grow from roughly 4 per cent of US households to 14 per cent, up 350 per cent but from a very small base.

“TDG said early on that the future of TV was an app. Unfortunately, most incumbent MVPDs weren’t taking notes,” suggests Joel Espelien, TDG Senior Analyst. “The question is no longer if the future of TV is an app, but how quickly and economically incumbents can adapt to this truth and transition to an all-broadband app-based live multi-channel system.”

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