Traditional television subscriptions in the United States will fall by a quarter by 2030, down from 80% to 60% of homes. Meanwhile online multichannel services will rise from 4% to 14% of homes. Taken together, the forecast fall is just 7%, meaning that four out of five households in the United States will still be subscribing to multichannel television services at the end of the next decade.

The forecast comes from a TDG Research report on The Rise of the Virtual Pay-TV Provider.

TDG expects that the penetration of live multi-channel pay-TV services will decline from 85% of US households in 2017 to 79% in 2030. It says that while that is a loss of only 7%, it nonetheless illustrates the secular decline of a once healthy market space. By 2030, TDG predicts that around 30 million households in the United States will not have a multi-channel pay television service of any kind.

Over this time period, TDG predicts that traditional ‘legacy’ pay-television penetration in the United States will fall by 26%, from 81% of households in 2017 to 60% in 2030. At the same time, virtual pay-TV penetration will grow from roughly 4% to 14% of households in the United States.

Given industry concerns about so-called ‘cord-cutting’, this forecast seems relatively conservative. TDG Research has been following this trend for over a decade, predicting that the future of television is an app.

However, the forecast suggests that the move to online ‘virtual’ pay-television services will be relatively modest.

This is consistent with the trends shown in our Multiscreen Index. While there have been declines in traditional pay-television subscriber numbers, these have been partially compensated for by the rise in services delivered online.

In many ways this is comparable to previous technology shifts, from the launch of direct-to-home satellite, to the rise of telco television, and now the introduction of online television services.

Notably, telco television, which promised a better user experience than cable or satellite, has not made a major impression in the United States. After rapid early growth, the telco television services now operated by Verizon and AT&T have 8.34 million subscribers between them. Compare that with 33.81 million satellite television subscribers.

One could also compare that with 51.35 million Netflix subscribers in the United States. However, Netflix is not a direct substitute for television. It is often more of a supplement to television and a substitute for disc-based media.

A penetration of 14% of households in the United States for online multichannel services in 2030 might be over 24 million homes, taking into account population growth.

Equally, 60% of households would still equate to over 85 million homes still paying for traditional television services in 2030.

The Rise of the Virtual Pay-TV Provider — Analysis & Forecasts is published by The Diffusion Group.