According to the Diffusion Group, the traditional residential pay TV industry will lose 26% of its subscribers by 2030. The research house foresees virtual and over-the-top (OTT) operators such as Sling TV and DirecTV Now competing with traditional cable, satellite and telco pay TV providers for a larger slice of a declining market.

TDG expects the penetration of live multi-channel pay TV services to decline from 85% of U.S. households in 2017 to 79% in 2030. While statistically a loss of only 7%, it nonetheless illustrates the ongoing decline of a once healthy market space, TDG says. TDG predicts that by 2030, roughly 30 million U.S. households will live without a multichannel video programming distributor (MVPD) service of any kind, be it virtual or legacy.

During the forecast period, legacy MVPDs are expected to experience considerable subscriber losses, due not only to long-term industry trends but also to growing competition from virtual pay TV providers. Consequently, legacy pay TV penetration is expected to fall from 81% of U.S. households in 2017 to 60% in 2030, down 26%. At the same time, virtual pay TV penetration is expected to grow from roughly 4% of U.S. households to 14%, up 350%, but from a very small base.

"TDG said early on that the future of TV was an app. Unfortunately, most incumbent MVPDs weren't taking notes," said Joel Espelien, TDG senior analyst. "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."