Cord-Cutting Speeds Up as TV Providers Scramble to Boost Profits
The number of households without a traditional pay-television subscription could soon equal those that have one, a new forecast finds.
The number of Americans who are cutting the cord on their cable, telco and satellite TV services continues to accelerate, according to a new forecast from eMarketer released Tuesday.
The findings come as the tipping point for cord-cutting has arrived as traditional TV providers look to boost profits by offering fewer promotions and Disney, WarnerMedia and Apple get set to join Netflix and Amazon Prime in the streaming arena.
eMarketer reports that by the end of this year the number of pay TV households will fall by 4 percent to 86.5 million and the number of households with a traditional pay TV subscription will fall below 80 million by 2021, with more than one-fifth of households by then having become cord-cutters.
The research firm in its latest survey of the U.S. pay TV market said the number of households without a traditional pay TV subscription is quickly approaching the number of those that have one. The report predicts that, by 2023, the number of pay TV households will stand at 72.7 million, while the number of those without a pay TV package will number 56.1 million.
eMarketer found in its report that the accelerating pace of cord-cutting is caused by TV providers themselves as they put improving profit margins before revenues. "That is coming at the expense of subscribers, who often drop services when prices rise and promotional deals don't get renewed," eMarketer argues in its report.
AT&T during its latest financial quarter saw its entertainment division, which includes satellite TV provider DirecTV, lose 83,000 subscribers as they left the service when introductory price promotion plans lapsed. Rival Charter Communications is also losing subscribers as, rather than cut package prices as cord-cutting grows, promotional plans are ending as higher-margin customers are pursued.
eMarketer forecasting analyst Eric Haggstrom in the report also argues rising programming costs for cable, satellite and telco operators makes it increasingly difficult to to turn a profit while providing pay TV subscriptions.
"Their answer has been to raise prices across the board, and it seems that they are willing to lose customers rather than retain them with unprofitable deals," he wrote in the report.