Forecast: 58m US broadband homes MVPD-free by 2025

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According to The Diffusion Group — a division of Screen Engine/ASI — by 2025 more than half of US broadband households will live without a MVPD (multichannel video programming distributon) service. During this time, pay-TV services will lose 36 per cent of their 2020 subscriber base, up roughly four-fold from the prior 5-year period (-9.5 per cent).

TDG’s 2020-2025 forecasts reflect two recent insights:

  1. The rate of decline in legacy MVPD subscriptions exceeded TDG’s worst-case scenario, and
  2. Consumer research reveals cord-cutting proclivities have reached a record high.

In 2017, TDG forecast year-end 2020 legacy MVPD households would be between 83.5 million (low) and 87 million (mid), most likely at the lower end of this range. Legacy MPVD subscribers at year-end 2019 totaled 81 million, below TDG’s least-optimistic forecasts.

In late 2019, TDG modified its legacy MVPD expectations to better reflect the increased pace of cord-cutting. The new model predicted Q4.20 legacy subscribers would come in between 75.7 million (low) and 76.7 million (mid). As of Q2.20, there were just over 77-million legacy subscribers, so year-end numbers are likely to align with TDG’s 2019 forecasts.

Regarding virtual MVPD subscribers, TDG’s 2017 expectations for Q4.20 ranged from 11.4 million (mid) and 14.0 (high) million. As of Q2.20, there were 9.8 million vMVPD subscribers, so year-end numbers are likely to come in a bit below the 2017 mid-range forecasts, but in line with late-2019 updates predicting Q4.20 vMVPD subscribers to fall between 11.2 million (mid) and 10.9 million (low).

As to the second insight, Q1.20 research suggests cord-cutting proclivities may be moderating. When compared with prior and subsequent research, this proved to be an anomaly, and TDG warned clients of that likelihood. TDG’s Q3 research found this rate had in fact increased.

“For the last decade, TDG accurately anticipated the rate of legacy’s decline and the sluggish growth of vMVPDs,” said Michael Greeson, President and Principal Analyst at TDG. “However, our 2017 forecasts underestimated the growth in cord-cutting and overestimated the uptake of vMVPDs. Beginning in 2007, our 5-year forecasts have been eerily accurate, but it was obvious that 2017 forecasts needed to be tweaked. We were within 5 per cent, but at two years out versus five.”

For perspective, consider the following.

  • In 2015, 16 per cent of broadband households were to some degree likely to cancel their pay-TV service, 7 per cent moderately likely or definitely doing so.
  • Today, 25 per cent of broadband households are similarly inclined (up 56 per cent from 2015), with 13 per cent moderately likely or definitely doing so (up 86 per cent from 2015).
  • Thus, 14-million US broadband households are more than slightly likely to ditch pay-TV altogether, nearly half of which will do so in 2020.

Given these trends, TDG expects that 2025 will see less than half of US broadband households subscribing to an MVPD service. “These video nomads have a very different concept of home video than their predecessors—one that costs less and includes a more self-determined channel lineup.’ As TDG first predicted in 2006, this new viewing paradigm is largely defined by an evolving set of paid, transactional, and free video streaming services—in one-third of cases supplemented by OTA—configured not by a pay-TV operator but by household decision-makers.

With MVPD-free viewers set to comprise a majority of broadband households in 2025, now is the time to field research to understand their behaviors, motivations, and preferences; and to best design and pitch new video services. Such insights are critically important to all companies in the value chain, whether content creators, aggregators, distributors, or Connected TV hardware & software vendors. Sadly, most companies are still in flux regarding how best to serve these prospective buyers.


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