After shedding more than 700,000 subscribers in the first quarter, the pay-TV industry could post collective losses of more than 1 million linear customers in Q2, UBS analyst John Hodulik told investors.

"That would be the worst result on record and equate to a 2.5% annual decline,” Hodulik said in a note sent out last week.

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The linear pay-TV industry was already on track for a 2.1% decline based on its first-quarter losses. Hodulik believes the attrition will only continue to get worse in ensuing quarters.

"We estimate this will put the industry on pace for a 3.3% decline in 2017 and 4.0% in 2018,” he added.

Tallying first-quarter results from the 11 largest pay-TV companies in the U.S., covering 95% of the market, Leichtman Research Group estimated that the linear portion of the business shed around 758,000 subs during the first three months of the year. This loss was offset, somewhat, by the growth of virtual MPVD services run by satellite TV carriers Dish Network and DirecTV.

MoffettNathanson analysts’ Craig Moffett estimated the total linear loss to the industry to be 768,000.

For his part, Hodulik is bullish on the virtual services.

"We believe YouTube TV and Hulu Live are off to strong starts (both launched in 2Q17) while DirecTV Now regroups as it deals with technical issues,” the analyst wrote. “While Sling TV and DirecTV Now offer consumers lower prices, we believe YouTube and Hulu are more clearly taking advantage of the benefits of being an online/mobile service (intuitive user interface, strong search & discovery, etc.), have leading expertise and trusted brands for streaming video, and will have significantly faster innovation cycles given their tech scale.

“Aside from solving many of the issues that have plagued early offerings, we also believe these services will boost awareness of the overall streaming TV market going forward,” Hodulik added.