Alert: US Broadband Market Matches Pay-TV Market in Size

It’s well known that in recent years the pay-TV market has been shrinking, even if sometimes the rate of cord-cutting has been overblown. At the same time, many of the companies that offer pay-TV services have been adding broadband subscribers. And for the first time, in Q1, the number of broadband subscribers matched (if not exceeded) the number of pay-TV subscribers, per our review of Leichtman Research Group (LRG) data.

During the quarter, the largest pay-TV providers in the US had roughly 93.3 million subscribers, down more than 400,000 from a year earlier. These companies represent roughly 95% of the total pay-TV market, according to LRG’s estimates, meaning that the total pay-TV subscriber market is roughly 98.2 million strong.

The largest providers in the broadband market, meanwhile, added almost 1 million subscribers year-over-year in Q1. These providers – who also represent about 95% of the total broadband market – now have 93.9 million subscribers, suggesting that the total broadband market has close to 98.9 million subscribers.

Comparing the broadband vs. pay-TV subscriber numbers of the largest providers indicates that during Q1:

  • Comcast had more broadband (25.13 million) than pay-TV (22.55 million) subscribers; as did
  • Charter, with almost 6 million more broadband (23.05 million) than pay-TV (17.15 million) subscribers.

To combat revenue losses from cord-cutting, these large companies might very well increase the price of broadband.

Even so, the rise of broadband penetration might also provide an extra jolt for cord-cutting, as it encourages more households to sign up to subscription video on-demand (SVOD) services such as Netflix and Amazon Video.

One note on that: a recent study that has been picked up by various research and press outlets claims that “streaming service use [is] now more common than cable subscriptions” (borrowing a headline there). This conclusion is determined from 67% of survey respondents reporting access to a streaming service versus 61% to a cable subscription. Now if this just refers to cable TV (and not satellite or any other form of pay-TV), it could be true, but the implication that streaming services have wider penetration than pay-TV services must be examined in the broader context of research.

Consider that roughly 8 in 10 households in the US subscribe to pay-TV (this according to various independent sources), whereas SVOD penetration only reached half of US households in Q1 of last year.

There may well come a time soon enough when SVOD penetration tops pay-TV penetration, but it’s highly unlikely we’re already there…