An analyst group says cord-cutters will outnumber pay TV users in the US by the end of 2023. But a close look at the data shows things are not quite so cut and dried.
This week, we will closely examine Inside Intelligence’s claim that by the end of 2023, the number of cord-cutters will exceed the number of traditional TV service users for the first time. The statement sounds clear enough and emphasizes how fast traditional pay TV is declining. But when you look closely, things are not nearly as simple, and it’s clear traditional TV will remain with us for years to come.
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Cord cutters to outnumber traditional pay TV viewers by the end of the year (2:45)
Inside Intelligence says that by the end of 2023, the number of cord-cutters will exceed the number of traditional TV service users for the first time. It says that the number of pay TV customers will drop 10.2% this year to 121.1 million, and the number of non-pay TV customers will climb 12.5% to 144.1 million. The company also says that by 2027, the number of people using services like Netflix and Hulu will grow to 182.4 million, and traditional pay TV viewers fall to 91.3 million.
Let’s take a look at each of these claims and see if we agree with them.
Traditional pay TV customers in the US (4:00)
As of the third quarter 2023, nScreenMedia estimates there are 59 million cable, satellite, and telco TV subscriptions in the US. Since there are 130.6 million occupied homes in the US, the penetration of traditional pay TV is 45%, well below half. It dropped below 50% in Q1 of this year.
By the end of the year, the number of traditional pay TV subs will likely fall another 2 million to 57 million, putting penetration at 43.5%.
By the end of the year, there should be about 74 million US homes without a cable, satellite, or telco TV subscription.
However, Inside Intelligence is using the number of traditional pay TV adult users, not subscriptions. It estimates there will be 265 million adults in the US by the end of the year. US Census says there were 261 million in July 2022. So, let’s go with Inside Intelligence’s number. nScreenMedia estimates suggest that by the end of 2023, there will be 110 million adults with access to traditional pay TV and 155 million without it. Inside Intelligence says there will be 121 million with it and 144 million without it. So, that’s an 11 million difference in favor of the cord cutters.
What about vMVPDs? (6:30)
TVRev’s Alan Wolk reminds people that some people who leave traditional pay TV are cord-shifters, not cord-cutters. They pick up a subscription to a virtual MVPD like Sling TV or YouTube TV to replace their cable TV subscription. So, what happens when we include them?
nScreenMedia estimates there are 16.3 million vMVPD subscribers, maybe climbing to 16.6 million by the end of the year. Adding those to traditional pay TV subscribers brings the number of homes with access to the big TV channel bundle to about 73.6 million (56% of occupied homes.) So, to be accurate, there will be 116 million adults who are cord-cutters by the end of the year and 149 million with access to the big TV channel bundle.
When will big bundle users fall below 50%? If the trends we see in the market continue into 2024 and 2025, and I see no reason they won’t, by the end of 2024, the split will be 50/50. And in 2025, true cord-cutters will exceed those with access to the big bundle of cable TV channels.
Many people will still watch traditional TV (11:00)
Before we go crazy and start pronouncing the death of traditional TV, there is one other TV source we should discuss: other-the-air antenna users.
Nielsen says that 14.5% of the 130.6 million US TV homes used over-the-air (OTA) antennas to watch television in the US in September 2023. The number of households decreased by under 1 million from 2022 to 18.1 million homes.
The slight decline in OTA usage over the last year is a surprise. The industry had been making small but steady gains for some time as cord-cutters hooked up antennas to continue to watch local TV. Two things suggest that the dip in OTA homes is temporary. As the RSNs fail, leagues and teams are looking to local broadcasters as part of the solution to continue reaching local fans (the other part of the solution is streaming).
The rollout of NextgenTV, with its UltraHD and advanced audio capabilities, should also help generate fresh interest in OTA. However, the new broadcast standard has challenges, including patent disputes, channel encryption problems, and some device manufacturers failing to support it. That said, broadcasters are committed to NextgenTV, and I’ve no doubt it will eventually win out.
And when considering OTA access, traditional linear TV will likely be with us for years to come.
Conclusion (14:00)
So, to answer the question I posed at the beginning of the podcast: will cord-cutters outnumber traditional pay TV users by the end of this year? The answer is yes – and they have done since the beginning of the year – if we only count cable, satellite, and telco TV subscriptions, and no if we add in vMVPD subscribers.
Check out the US TV Market in the Trackers features on the nScreenMedia website. And while there, sign up for the newsletter.
