Covid-19 pandemic accelerates pay-TV cord-cutting in 2020 | Media Analysis | Business
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The economic downturn caused by Covid-19, with increased competition from a stronger streaming sector is driving cord-cutting in both mature and emerging markets, slowing further worldwide pay-TV market growth says ABI Research.
Sky BT 21Feb2020
The analyst’s Pay TV and Residential Broadband Subscriptions market data report forecasts that the worldwide pay-TV market will see a slight decline from 2019 to reach a 1.07 billion subscriber base in 2020. It said that before the pandemic, cord-cutting centred mostly in mature markets, where broadband penetration is high.

“North American operators reported a loss of more than two million subscribers in the first quarter of 2020 alone. Now, the Covid-19 pandemic is responsible for significant subscriber loss,” explained Khin Sandi Lynn, industry analyst at ABI Research. “One reason is that the cancellation of sports events due to the pandemic has caused many sports fans to cancel their pay-TV packages. To lower churn, operators are offering discounted of pay-TV packages or allowing customers to suspend the subscription until the sports events resume.”

The economic impact of Covid-19 is driving cord-cutting in emerging markets too. Indian satellite TV operator Tata Sky lost 1.5 million subscribers in first half of 2020. Indian cable operators could not collect 80% of their subscription fees during the lockdowns as consumers struggled to pay their bills. Emerging markets such as Brazil, Colombia, and Thailand are experiencing similar conditions.

“In mature markets, cord-cutting could create an opportunity for streaming services since some cord-cutters may choose video streaming to replace pay-TV service. However, in emerging markets, low broadband penetration could be a barrier for many consumers to move to streaming,” Lynn added. “To maintain a subscriber base, pay-TV service providers need to implement price adjustments, such as repackaging the services into smaller channel bundles or significantly increase promotions. heavier subsidising of consumer premise equipment (CPE) may also help customers’ monthly fees burden in the short term.”

Looking forward, the analyst warned that a sudden spike in churn could also lead to content piracy. And that while implementing strategies to lower churn, service providers should also focus on content security measures.

Yet even though it says that Covid-19 has undoubtedly dented the pay-TV market, the Pay TV and Residential Broadband Subscriptions report sees the deep subscriber loss as likely to be temporary. It predicted that when sports events resume, sports fans are likely to go back to pay-TV service and that in emerging markets with limited broadband connectivity and limited choice of streaming services, traditional pay-TV services were likely to gain subscribers and remain strong beyond the pandemic. ABI Research forecasts the pay-TV market to reach 1.1 billion subscribers in 2025.