20% of Households Will Not Have Cable TV in 2018

By Douglas A. McIntyre Updated Jan 13, 4:12PM EST · Published Dec 11, 6:59AM EST

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20% of Households Will Not Have Cable TV in 2018 — © Thinkstock

The brutal advance of cord cutting by Americans who watch entertainment, sports and news on TV will further wound traditional cable and satellite providers. According to new research, one in five households will no longer have subscriptions to these traditional conduits of video by 2018. The evolution will be catastrophic to cable content providers like ESPN, a worry already spreading the industry.

Research firm eMarketer comments on the pace of cord cutting:

A growing percentage of American households are cutting the cable TV cord each year, according to eMarketer’s first forecast for the pay TV market. In 2015, there will be 4.9 million US households that once paid for TV services but no longer do, a jump of 10.9% over last year. And that growth will accelerate in the coming years, with the number of cord-cutting households jumping another 12.5% in 2016. In fact, by the end of next year, the number of US households subscribing to cable and satellite will drop below 100 million.

The cable and satellite problem extends beyond cord cutters to another set of viewers:

Also noteworthy, the share of viewers who have never subscribed to cable or satellite (“cord-nevers”) is growing as well. This year, the percentage of US adults who have never subscribed to cable or satellite TV will reach 12.9%. That share will grow to 13.8% by 2016.

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Some companies that rely on fees paid by cable TV will start to shrink. Walt Disney Co.’s (NYSE: DIS) ESPN already has begun layoffs. It is one of the most profitable sets of channels in the industry. Other channels, which include Time Warner’s (NYSE: TWX) HBO, have made their content available to cord cutters via broadband for a fee. However, this move may not bring HBO nearly enough revenue to make up for what its loses in cable fees. It may take years to show how the sales and profits from the new model will work.

As the cord cutting trend increases, at least according to eMarketer forecasts, cable TV content providers may have no other option but to cut costs to keep up with falling revenue. ESPN is only the beginning.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.