In recent years, the landscape of television consumption has undergone a significant shift, driven by the rise of streaming services and the increasing cost of traditional pay TV. This has resulted in a notable decline in pay-TV penetration in the U.S. According to a report by research firm Ampere Analysis, 2024 is predicted to mark the first annual decline in global pay-TV penetration, with the number of pay-TV subscriptions relative to the number of households reaching its peak in the fourth quarter of 2023 at 60.3 percent.
It is anticipated that global pay-TV penetration will have fallen by almost four percentage points by 2028. The decline in pay-TV has been particularly prominent in North America, although all regions are expected to experience a decline by 2025. Rory Gooderick, a senior analyst at Ampere Analysis, explains that the growth of pay-TV uptake over the last five years has been primarily driven by Asia-Pacific and Central and Eastern Europe. However, the declines in the Americas, particularly in North America, are due to streaming competition and the high price of pay TV, which currently sits at over $90 a month.
North America, in particular, has seen a significant drop in pay-TV penetration, from a high of 84 percent in 2009 to 45 percent in 2023. This decline is attributed to high costs and competition from a mature subscription video on demand (SVOD) market. Despite this decline, the annual revenue generated per user is projected to be over $1,100 in 2023, the highest across any region. Latin America has also experienced declining penetration since 2016, particularly in Brazil, which has seen a drop of roughly 10 percentage points since its peak pay-TV penetration of 42 percent in 2016.
On the other hand, the Asia-Pacific and Europe regions have witnessed the highest pay-TV penetration growth in recent years. China Mobile, in particular, has contributed to significant gains in the Asia-Pacific region after acquiring an IPTV license in 2018. Growth in these regions has largely been driven by low-cost IPTV services bundled into broadband packages for a nominal cost. Despite the anticipated decline after 2025, there are still some growth markets, such as Portugal, Serbia, and Hungary, expected to see further growth in the forecast period.
Ampere also highlights the potential opportunity presented by the bundling of services, citing the recent carriage deal between the Walt Disney Co. and Charter Communications as a possible blueprint. This partnership saw select Disney streaming services bundled into Charter’s TV packages, indicating a potential shift for traditional cable TV companies to transition into a streaming aggregation play and stabilize subscriber trajectories. Despite the projected decline in the reach of pay-TV products, cable and satellite platforms are expected to remain a powerful force in the TV world and important distribution partners for streaming products.
In conclusion, the decline in pay-TV penetration is a trend that is further exacerbated by the rise of streaming services and the high cost of traditional pay TV. While regions like North America and Latin America have seen significant decline, there are still growth opportunities in other regions such as Asia-Pacific and Europe. The bundling of services presents a potential strategy for traditional cable TV companies to adapt to the changing landscape and remain relevant in the evolving media industry.