Hmm, I'm skeptical that there's a whole lot more folks out there willing to abandon the cable channel bundle and become "true cord-cutters," i.e. those who use only OTA and/or OTT services like Netflix (but not vMVPDs like YouTube TV that just stream the cable bundle). Yes, the total number of bundle subscribers (MVPD + vMVPD) will still trend down a bit as older folks die and young people start their own households as cord-nevers. And yes, we'll see more folks leave bigger channel bundles for smaller, less expensive ones, including those from vMVPDs.
I disagree. If you look at people just entering the workforce and getting their own places today, they have no interest in a bundle of linear TV channels. They're watching YouTube, Netflix, Amazon, and more YouTube, often in relatively short sessions. If you look at the data for YouTube's grown on actual TVs, it's meteoric the past couple of years, as more content comes online that's better suited for sitting on the couch and watching it. Meanwhile, you look at what everyone is talking about, it's mostly Netflix, with a little Amazon and Hulu mixed in. My sense is that the current rate of cord cutting of 3-4 million subscribers/year will continue as long as the price of cable keeps going up and up, with vMVPDs re-capturing roughly half of those. The only reason vMVPDs have done so well with recapture in the past couple of years is that they are relatively new, and have been responding to pent-up demand from people who already cut the cord, as well as those who wanted to replace the cord. Once that pent-up demand is worked out of the system, we will see far more true cord-cutting and cord-nevers in the market. The economy is doing mediocre when you look at actual hourly wage growth, and with a lot of costs that are high, a lot of people aren't looking to drop a ton of money on pay TV.
But most households, especially those with multiple members, have no interest in completely leaving the bundle behind. It's where most sports are available, plus 24/7 news, along with the latest episodes of various series they're hooked on. And there's an ease and familiarity with how it works. For most Americans, it's not worth the hassles of becoming a "cord cobbler" to save a few hundred dollars per year. Sure, they like Netflix, but it's essentially a premium add-on to cable for them, like HBO, rather than a viable replacement. Which is why it's becoming a necessity for every MVPD to offer UIs that incorporate Netflix alongside their own cable TV content.
Most of the series anyone is talking about are on Netflix, with a few on HBO, Showtime, Amazon, and Hulu. Sports and news are the only things that have been sort of holding pay TV together for the last several years. Those are easily available on something like YouTube TV, which I think is poised for very strong growth, and there's no contract, so even people who subscribe to YouTube TV for half the year for their favorite sport are paying $240/year instead of $1400/year for traditional pay TV. Even that is a drastic shift in the entire ecosystem.
When you look at 3-4M subscribers lost from traditional MVPDs per year, that's 3-4 percent *every year*. When you add that up over a decade, that's a third of the entire market, which is absolutely game-changing for a business with high fixed costs and variable revenue.
We're rapidly entering an age where younger viewers, either young adults who are coming into the market, or the kids in many of those households are more comfortable and familiar with smart TVs and streaming boxes than they are with a traditional cable box, and would rather stream *everything*. Now that the kids aren't going to miss cable, their parents who are stuck with the bill are going to be much less likely to want to pay it.
While the MVPDs may be able to keep some older, technologically impaired users around by integrating Netflix into their boxes, most younger users would rather just stream everything. Further, there are several million more would-be cord cutters in cheap bundles from Comcast, Verizon, and others. As the economics of pay TV change, and the big providers stop caring so much about TV subscriber numbers, and they stop offering really aggressive bundles, those several million subscribers will flee pay tv over the course of about 2 years, further accelerating cord cutting.
If there is to be a decisive shift away from the cable bundle, I think it's going to be because a significant amount of live sports moves from the bundle to OTT services (keep an eye on NFL carriage come 2022 when current contracts expires) and also because content owners such as Disney and AT&T decide that they're willing to let their OTT services cannibalize their linear cable channels by making new content on the linear channels also available in the OTT service same-day or next-day. Because there's just not room for all the current and forthcoming OTT subscriptions to survive and thrive alongside the cable bundle too. Very few are going to subscribe to the bundle + Netflix + Disneyflix + Hulu + AT&T's HBO/Warner + Viacom OTT, etc. Too expensive. So the question is: do these direct-to-consumer OTT services remain mostly a complement to the bundle or do they replace it?
I think just looking at sports is relatively short-sighted, in two ways. For some folks, they want to watch their team, but they can do so at a much smaller cost with something like YouTube TV, as I noted above. However, there is a significant, and rapidly growing group of people who just don't care that much about TV. These days, some people get most of their entertainment from gaming, movies, reading, or other activities/hobbies that don't involve watching TV, and with only so many eyeball-hours to have their eyeballs glued to a screen, pay TV will lose. It's a double whammy in the sense that people who enjoy TV are getting it from other places, while people who have other interests are going elsewhere for their screen time, like gaming.
Further, there has been a cultural shift in terms of binge watching. People are no longer programmed to tune in every week at xyz time on a linear TV or cable network, and are enjoying binge watching. Once that behavior is changed, people are more willing to wait for a great TV show, and with the number of shows that are available to a person at any given time, they may not be as eager to tune into a weekly show, and instead binge it later when it's available on streaming.
I was a naysayer about cord cutting just a few years ago, and I thought that it was only a right-sizing of the market for people who just didn't watch TV. What I failed to acknowledge is that the way people are watching TV has fundamentally changed, and that a significant portion of the population simply doesn't have to have this exact show or that exact show. They are either influenced by their friends, where Netflix reigns supreme in terms of being the most talked about content source, or they like to browse and discover things, and Netflix, as well as other streaming services, make that much, much easier than it ever was on cable. Cord cutting is the new normal, it will just take time for people to adjust.