Pay TV services lost 5 million subscribers in 2023 as streamers eat into their market

The news: Pay TV churn accelerated significantly in 2023, according to research published by Leichtman, marking a significant step in the viewer migration from pay TV to over-the-top subscription video services.

• The largest pay TV providers, which account for 96% of the market, lost approximately 5 million subscribers in 2023, compared with 2022’s loss of 4.6 million subscribers.
• Cable providers were hit hard as well, losing approximately 3.8 million subscribers versus 3.5 million in 2022.
• There was a notable winner among Leichtman’s reporting: Virtual multichannel video programming distributors (vMVPDs), which include digital pay TV services like YouTube TV, added 1.9 million subscribers. The gain was up from 1.67 million in 2022.

Turning point: The significant decline in traditional pay TV and cable memberships is a sign of US consumers’ declining appetite for pay TV services.

• That is, unless the pay TV service offers a specific killer app: sports. Sporting events are the most-viewed broadcasts on traditional pay TV and cable, with the NFL accounting for 93 of the top 100 broadcasts in 2023, per Nielsen. A large number of remaining pay TV subscribers are likely staying subscribed for access to sports content.
• But that content is now more accessible on digital services than ever before, with OTT streaming services like Prime Video and vMVPDs like YouTube TV both offering NFL games, eating into pay TV’s market.
• There are also more channels through which pay TV customers can transition to digital services than in recent years. Disney set a new standard for network-provider contracts last fall when it got Charter Spectrum to offer Disney+ subscriptions to its customers after a carriage fee battle, adding to emerging bundle offerings that are lowering the cost of streaming services.
• Looking forward: 2023 marked the start of a major effort among streaming services to crack down on password-sharing and drive consumers toward ad-supported subscription tiers.
• Those efforts led to strong revenue and subscription growth for companies like Netflix and others, which offer large libraries of content akin to pay TV providers, albeit at a much lower cost.
• Consumers’ growing acceptance of ads on streaming services—and increased access to sports content—suggests that many are beginning to view subscription OTT services as the de facto access point for video entertainment.
• With access to much of the same sports and non-sporting material, on top of new and in-demand content, the choice between a cheaper monthly ad-supported service and a costly cable package is a simple one.