At a conference in 2015, Netflix (NASDAQ: NFLX) CEO Reed Hastings famously predicted, "We will come to see that linear TV declines every year for the next 20 years and that internet TV rises every year for the next 20 years."
In 2020, that forecast looks more prescient than ever. Viewing hours on streaming services like Netflix and Roku (NASDAQ: ROKU) have boomed during the pandemic as consumers have been stuck at home.
At the same time, linear TV and movie theaters are reeling from COVID-19. Broadcast and cable networks are highly dependent on advertising revenue, which has shriveled up because of the pandemic and accompanying recession. Live sports, one of the biggest draws on traditional TV, has been largely absent during the crisis. Magna Global forecasts a 12% decline in global linear TV ad spending this year. Overall advertising in the U.S. excluding political spending is expected to fall 17%. Meanwhile, cord-cutting is likely to accelerate as consumers cut back on spending in a bad economy and switch to skinny bundles.