COVID-19 pandemic accelerates cord-cutting in 2020Tuesday, October 13th, 2020
COVID-19 Pandemic Accelerates Pay-TV Cord-Cutting in 2020
- Economic downturn and streaming competition is driving cord-cutting in both mature and emerging markets
OYSTER BAY, New York — Worldwide pay-TV market growth has slowed over the past few years due to the shift from video consumption to online streaming. The COVID-19 pandemic is further accelerating the cord cutting trend, resulting in higher pay-TV churn in many markets. Global tech market advisory firm, ABI Research, forecasts that the worldwide pay-TV market will see a slight decline from 2019 to reach a 1.07 billion subscriber base in 2020.
“North American operators reported a loss of more than 2 million subscribers in the first quarter of 2020 alone. Now, the Covid-19 pandemic is responsible for significant subscriber loss. One reason is that the cancellation of sports events due to the pandemic has caused many sports fans to cancel their pay-TV packages. To lower churn, operators are offering discounted of pay-TV packages or allowing customers to suspend the subscription until the sports events resume,” explains Khin Sandi Lynn, industry analyst at ABI Research.
Before the pandemic, cord-cutting centered mostly in mature markets, where broadband penetration is high. The economic impact of COVID-19 is driving cord-cutting in emerging markets too. Indian satellite TV operator Tata Sky lost 1.5 million subscribers in first half of 2020. Indian cable operators could not collect 80% of their subscription fees during the lockdowns as consumers struggled to pay their bills. Emerging markets such as Brazil, Colombia, and Thailand are experiencing similar conditions.
“In mature markets, cord-cutting could create an opportunity for streaming services since some cord-cutters may choose video streaming to replace pay-TV service. However, in emerging markets, low broadband penetration could be a barrier for many consumers to move to streaming,” comments Lynn. To maintain a subscriber base, pay-TV service providers need to implement price adjustments, such as repackaging the services into smaller channel bundles or significantly increase promotions. Heavier subsidizing of Consumer Premise Equipment (CPE) may also help customers’ monthly fees burden in the short term. “However, a sudden spike in churn could also lead to content piracy. While implementing strategies to lower churn, service providers should also focus on content security measures,” she notes.
Although COVID-19 has dented the pay-TV market, the deep subscriber loss is likely to be temporary. When sports events resume, sports fans are likely to go back to pay-TV service. In emerging markets with limited broadband connectivity and limited choice of streaming services, traditional pay-TV services are likely to gain subscribers and remain strong beyond the pandemic. ABI Research forecasts the pay-TV market to reach 1.1 billion subscribers in 2025.
These findings are from ABI Research’s Pay TV and Residential Broadband Subscriptions market data report. This report is part of the company’s Video and Cloud research service, which includes research, data, and ABI Insights. Market Data spreadsheets are composed of deep data, market share analysis, and highly segmented, service-specific forecasts to provide detailed insight where opportunities lie.
Links: ABI Research
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