Cord-cutting amid the rise of streaming services and the high price of pay TV has significantly reduced pay-TV penetration in the U.S. in recent years, while Asia-Pacific and Europe have continued to experience growth. Now, research firm Ampere Analysis is predicting this will change, forecasting that 2024 will record the first-ever annual decline in global pay-TV penetration, meaning the number of pay-TV subscriptions relative to the number of households).
“This will follow pay-TV penetration peaking at 60.3 percent in the fourth quarter of 2023,” it highlighted in a summary of a new report. “By 2028, global pay-TV penetration will have fallen by almost four percentage points.” The decline of pay TV “has been driven by North America, but all regions will be in decline by 2025,” it emphasized.
“Growth in global pay-TV uptake has been driven over the last five years by Asia-Pacific and Central and Eastern Europe,” explained Rory Gooderick, senior analyst at Ampere Analysis. “However, declines coming from the Americas, which are driven by streaming competition and the high price of pay TV in North America, currently sitting at over $90 a month, will contribute to global pay-TV penetration declining for the first time in 2024.”
In North America, pay-TV penetration has almost halved from a high of 84 percent in 2009 to 45 percent in 2023, “caused by a combination of high costs and competition from a mature subscription video on demand (SVOD) market,” Ampere noted. “Despite this decline, the annual revenue generated per user will sit at over $1,100 in 2023 across North America, the highest across any region.”
Latin America has also shown declining penetration since 2016, led by Brazil, “which has posted a drop of roughly 10 percentage points since its peak pay-TV penetration of 42 percent in 2016,” according to the report.
In contrast, the Asia-Pacific and Europe regions have seen the highest pay-TV penetration growth in recent years, “with large gains coming from China Mobile after it acquired an IPTV license in 2018,” Ampere explained. “This growth has mostly been driven by low-cost IPTV services, which are often bundled into broadband packages for a low or nominal cost. While these regions will also fall into decline after 2025, there are still some growth markets, such as Portugal, Serbia, Hungary which are expected to see further growth in the forecast period.”
The bundling of services provides a key opportunity here, according to Ampere, pointing to the recent carriage deal between the Walt Disney Co. and Charter Communications as a possible blueprint. “Despite the projected decline in the reach of pay-TV products, cable and satellite platforms will remain a powerful force in the TV world and important distribution partners for streaming products, as evidenced by the recent distribution deal between Disney and Charter in the U.S., which saw select Disney streaming services bundled into Charter’s TV packages,” said Gooderick. “This package structure, already increasingly common in Europe and parts of Asia, offers a framework for traditional cable TV companies to transition their business into a streaming aggregation play and stabilize subscriber trajectories.”