Within 3 Years, 20% of U.S. Households Will Not Subscribe To Cable Or Satellite TV

Will the trend of consumers flocking toward online and streaming video services at the expense of a costlier cable or satellite subscription continue? According to eMarketer, the trend is merely beginning to gather momentum.

EMarketer reported the results from a new study into cord-cutting. The report stated that in 2015, 4.9 million U.S. households will unsubscribe from their traditional TV services – an increase of 10.9 percent compared to 2014.

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Trend Gathering Momentum

Shares of Walt Disney Co (NYSE: DIS) sold off sharply back in November after the company reported that ESPN's subscriber base fell 3.2 percent, or by three million subscribers as of the end of October.

Meanwhile, some Wall Street analysts have reached a similar conclusion that the cord-cutting trend is gathering momentum, calling for investors to reset their expectations.

Analysts Guide Investors

"We understand, and in fact agree, with the market's decision to fast-forward to the inevitable conclusion and start valuing these businesses [media companies] as if they are declining assets," Todd Juenger of Bernstein said in a note back in August. "In practice, this means increasing the risk applied to an increased cord-cutting scenario. Which, in practice, means lower multiples."

Looking Ahead

By the end of 2016, the number of U.S. households subscribing to a cable or satellite service will dip below 100 million from 101.3 million in 2014, eMarketer added. In fact, by 2018, one in five U.S. households will not subscribe to a cable or satellite subscription.

"In addition to standalone offerings from the likes of HBO, there are new digital bundles that include many of the channels consumers could only have received with cable and satellite subscriptions in the past," eMarketer noted in its report. "This widespread availability of digital content makes cord-cutting a viable option for a growing segment of the viewing population."

Finally, eMarketer pointed out the number households that have never subscribed to a cable or satellite service, known as "cord-nevers," is also growing. By the end of 2015, 12.9 percent of U.S. adults will be classified within the cord-never category, and this figure will grow continue growing and reach 15.3 percent in 2018.

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