Anyone who has been paying attention to the television market has undoubtedly heard countless reports of cord-cutting, the process in which customers dissolve their ties with traditional television providers, opting instead to receive content via over-the-top (OTT) providers like Netflix and Hulu. As technology evolves and connectivity becomes faster and more widespread, it logically follows that customers would seek alternative, likely more affordable, mediums through which to receive entertaining content.
But according to a recent report, while cord-cutting is certainly occurring, it’s not occurring at a rate that spells imminent disaster for traditional television providers. In fact, the Digital TV North America report predicts that between 2013 and 2020, the pay TV market will add nearly five million customers, despite the penetration rate dropping from 87 percent in 2010 to 83.8 percent in 2020.
A vast majority of those who have cut their cords, according to the report, are those who were still subscribing to analog cable. By the end of 2010, 18.39 million customers still received such subscriptions. That number is projected to drop to 3.75 million by the end of this year, meaning that that segment of the market will have shrunk by 80 percent in four short years.
All of this news spells great things for the consumer, according to Simon Murray, principal analyst at Digital TV Research. When it comes to billing, they’re likely to notice it. Pay TV revenues in North America peaked last year, as providers brought in $95.36 billion, he said. That number will drop $8.75 billion to $86.61 billion in 2020, his company predicts.
“As the analog cable networks switch off, all pay TV operators will try to outdo each other on promotions, with pricing become a more and more important tool,” Murray explained.