One bright spot of the pay-TV industry over the last few years has been the virtual multichannel video programming distributors (vMVPDs). These providers deliver live TV over the top of an internet connection. Disney's (NYSE:DIS) Hulu + Live TV is the most popular service, followed by Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube TV. AT&T's (NYSE:T) AT&T TV Now (formerly DirecTV Now) and Dish Network's (NASDAQ:DISH) Sling TV are also popular choices.

But it doesn't look like the services will be immune from coronavirus-fueled cord cutting. The ease of cancelling the services may, in fact, lead to bigger subscriber losses for them compared to traditional providers. That said, the shift to vMVPDs from cable and satellite services may see an acceleration as we come out of the recession caused by the pandemic.

A laptop displaying a live Duke basketball game.

Hulu + Live TV. Image source: Hulu.

The only streaming services not growing like gangbusters right now

Consumers are streaming a lot more video as they stay home to help prevent the spread of coronavirus. Roku said in its first quarter letter to shareholders that its users streamed lots of on-demand programming -- both paid and ad-supported -- but "the growth of 'virtual' MVPD streaming has been more moderate."

Some services were already starting to lose subscribers, but AT&T and Dish reported accelerating subscriber losses for their vMVPD services. AT&T TV Now lost 138,000 subscribers in the first quarter, versus a loss of 83,000 in the first quarter of 2019. Sling TV lost 281,000 subscribers versus a gain of 7,000 last year. That's also a step up from the 94,000 subscribers it lost in the fourth quarter.

Meanwhile, there's signs of slowing growth at the market leaders. Hulu + Live TV added just 100,000 net new subscribers last quarter, although that could be partially owed to a price increase. Alphabet didn't disclose YouTube TV subscribers last quarter, but noted "subscriber growth across [YouTube's] various offerings" during its earnings call.

Keep in mind, the first quarter likely only saw a modest impact from coronavirus. But the ability to cancel and pause subscriptions instantly and with just the click of a button means cancellations come more swiftly compared to traditional providers.

The challenge will increase through the rest of the year

Investors should expect cancellations and subscription pauses to have picked up steam in the last month and a half. With millions of job losses and a lack of live sports, consumers aren't getting enough value from their pay-TV subscriptions to keep them in the budget.

While vMVPDs used to be an area of cost savings for consumers, price hikes over the last year have led to prices about on par with traditional services. AT&T has been most aggressive with its price increases, and it merely accelerated subscriber losses for AT&T TV Now. That's as good of an indication as any that vMVPD subscribers are just as price-sensitive -- if not more -- as traditional pay-TV subscribers.

AT&T CEO John Stankey expects the economic environment to lead to more cord-cutting in the second half of the year, as some will be left without a job when businesses reopen. And if media companies don't resume filming for television's fall season soon or the NFL delays its season openers, cord-cutting could get worse in the fall.

That said, vMVPDs still have several advantages over traditional pay-TV options. They have transparent pricing and no long-term contracts. They allow users to pause their subscriptions and come back when they're ready, which means some subscriber losses could come back very quickly. And they provide instant access without need to invite a stranger into your home to install equipment. These advantages should produce better results for the over-the-top services if and when consumers look to resubscribe to pay-TV.

While we're seeing increased consumer preference for cord-cutting due to factors that affect virtual MVPDs just as much as traditional MVPDs, the environment should accelerate the shift in subscribers from cable and satellite to over-the-top options as consumers evaluate their options.