Covid-19’s Economic Fallout Will Accelerate Linear TV’s Collapse

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Traditional television has been on the decline for years, but the continued economic fallout from the Covid-19 pandemic will make cord cutting even more pronounced, according to new research from the firm MoffettNathanson.

By 2024, traditional linear pay TV subscribers are expected to decline by 27 million, down to less than half of all occupied U.S. households, according to the research. U.S. consumer spending on traditional TV is expected to decrease by $23 billion from 2019 to 2014, bringing consumer spending on linear TV down to $76 billion in 2024—a low last seen in the industry during the 2008-2009 financial crisis.

“While the ultimate economic impact from COVID-19 remains uncertain, one thing we do believe is that this crisis will accelerate shifts in the media landscape,” analysts Michael Nathanson and Craig Moffett wrote.


The report underscores a point that early streaming entrants like Netflix, Hulu and Roku have emphasized again and again as pandemic-related shutdowns prompted sky-high streaming viewership: The pandemic’s wide-ranging effects will only speed up the steady consumer shift to streaming.

“Moments like this often accelerate some of the emerging trends that were already in motion, and that’s what we expect to continue to see,” Roku director of ad programming and research Dan Robbins told Adweek in April.

MoffettNathanson has unsurprisingly predicted a “meaningful uptake” of subscription streaming services over the next several years: U.S. consumers will spend about $22 billion more on subscription streaming by 2024, more than doubling the $16 billion spent on streaming in 2019 to $38 billion.

That means steady growth for almost all of the major streamers. Analysts predict Netflix will add about 9 million subscribers in the U.S. by 2024, compared to the 61 million domestic subscribers they reported in 2019. Disney+, the high-performing streamer in April surpassed 50 million subscribers across several markets, is expected to have 53 million domestic subscribers in the same time frame. And Hulu, which Disney now operates, is expected to grow even faster, with an estimated 58 million domestic subscribers by 2024.


Virtual MVPDs, which haven’t been as popular as the industry had hoped, are anticipated to help offset some of the steep losses in the traditional pay TV space and see more growth in the coming years. Analysts expect that vMVPDs will rise by nearly 60% to 16 million in 2024, compared to the 10 million vMVPD subscribers in 2019.

But that will not be enough to offset the steep losses in pay TV overall. While vMVPDs will offset around 5 million, or around 20%, of traditional linear pay TV subscription losses, there is still expected to be a 22 million decline in aggregate pay television subscribers over the next five years, the analysts said.

All in all, analysts expect aggregate U.S. consumer spending on video to fall by $3 billion over the next five years, down to $138 billion in 2024, compared to $141 billion in 2019.

Password sharing, which is somewhat commonplace among consumers, and the mobility of SVODs and vMVPDs to multiple locations, may further flatten overall spend. And streaming services are unlikely to be able to demand the same high price point of traditional pay TV, especially as companies like Amazon, AT&T and Comcast use their streamers as add-ons to other services.

“We do believe the increasing tendency towards cross-subsidization of other businesses with video is creating deflationary pressure on aggregate consumer spending,” the analysts wrote. “It can certainly be argued that in some economic sense, even when the service is given away ‘free,’ and where there is no wholesale payer, customers are still paying for the value of video, albeit only indirectly so.”

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