Traditional pay-TV providers are in a pitched battle with virtualized competitors such as Sling TV and DirecTV Now, or vMVPDs. Complicating matters is that virtual and traditional pay-TV providers are fighting over a shrinking pie, according to new research about virtual pay-TV penetration from The Diffusion Group (TDG).

The market share of traditional pay-TV providers (cable MSOs, satellite providers, and telcos) will decline from 81% of U.S. households this year to 60% in 2030, a decline of 26%, said TDG in the new report titled “The Rise of the Virtual Pay-TV Provider – Analysis & Forecasts.” Virtual pay-TV provider penetration will grow from 4% to 14% of U.S. households, a rise of 350%, over the same time period, researchers said.

Virtual Pay-TV Penetration

The bigger landscape is not kind to either side. The overall penetration of live multi-channel pay-TV is expected to decline from 85% to 79% between this year and 2030. That means that about 30 million U.S. households will have cut pay-TV, traditional and virtual.

The question will be how well these providers adjust to this fluid landscape. The signs so far suggest the answer is “not well at all,” said TDG Senior Analyst Joel Espelien in a press release. “TDG said early on that the future of TV was an app. Unfortunately, most incumbent MVPDs weren’t taking notes,” noted Espelien. “The question is no longer if the future of TV is an app, but how quickly and economically incumbents can adapt to this truth and transition to an all-broadband app-based live multi-channel system.”