The year 2020 saw a deluge of pay-TV subscribers sever ties with their providers amid the coronavirus pandemic. Around 6 million households cut the cord last year, according to an estimate from eMarketer. Without initiatives to keep households connected and a return to life outside the home and off the couch, cord-cutting will accelerate in 2021.

Close up on scissors cutting a cable cord.

Image source: Getty Images.

People are ready to cut the cord

Over one-quarter of U.S. TV households are planning to cut the cord in 2021, according to separate surveys from Civic Science and The Trade Desk. While Civic Science's data show a downward trend in consumers intending to cut the cord, The Trade Desk's surveys show a stark increase. Just 11% of pay-TV households were planning to ditch pay-TV back in April as the pandemic was taking hold in the U.S.

Over the course of 2020, streaming video services have proven a valuable replacement for time previously spent watching live TV. We saw several high-profile premium streaming-service launches, and ad-supported streaming services also grew in popularity as homebound consumers looked for additional entertainment to supplement their subscriptions. Streaming consumption now accounts for 68 percent of TV viewing versus 28 percent for traditional TV viewing, according to The Trade Desk.

Pay-TV operators aren't trying to keep them

Over the last year or so, the big pay-TV operators have shifted from trying to keep video subscribers to facilitating their video entertainment habits in whatever form they take.

Comcast (NASDAQ:CMCSA) is practically agnostic if its subscribers take video or not. If a customer doesn't want to pay for cable TV, it gives them a free streaming device. Comcast can make a small amount of revenue off the streaming platform, and it keeps customers subscribed to its internet service. Additionally, the cable giant is investing heavily in streaming itself with the introduction of its Peacock streaming service.

After a price increase at the start of 2020, Comcast is set to raise prices on video subscribers again in 2021. It's not willing to lose money on the video business just to keep internet subscribers.

Meanwhile, AT&T (NYSE:T) made some recent pricing changes as well. It discontinued its AT&T TV Now product, focusing on its similarly named AT&T TV service. Instead of offering promotional pricing upfront, it's offering a flat rate with no escalator in the second year. It's also getting rid of the two-year agreement entirely, so customers can come and go as they please. That could result in fewer sign-ups and higher churn rates. AT&T's also investing in stand-alone streaming with the introduction of HBO Max.

Charter Communications (NASDAQ:CHTR) has held up well compared to its competitors in pay-TV. It actually added subscribers in the second and third quarters, defying the rest of the industry. But it's doing so with shrinking revenue per subscriber, which is likely due to a push toward skinnier bundles of channels. Even CEO Tom Rutledge is pessimistic about the overall industry. "We don't think that the overall video marketplace has changed, meaning we still think fat bundle is a very expensive video, or under pressure, and will continue to be," he said on Charter's third quarter earnings call.

The big pay-TV providers are just now catching up with the rest of the industry. Smaller cable companies have dropped video service altogether in some instances since they can't rationalize the price. There's a growing shift toward streaming and skinny bundles of networks. While that means fewer subscribers, it shouldn't impact the profitability of their businesses, which are increasingly reliant on broadband customers.

Home-broadband subscribers are the biggest driver of profit growth for the cable businesses at Comcast and Charter. AT&T and Comcast's media businesses are now focused on streaming first instead of the big bundle, although those subscribers remain important. 

Ultimately, losing money on video subscribers is no longer tenable for the cable giants, especially when they can lock customers into internet service by bundling wireless phone service, a much more integral part of consumers' lives these days. So, with more people considering leaving pay-TV and the cable companies willing to let them go, cord-cutting could accelerate even further in 2021.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.