Since Netflix reported weak first-quarter 2022 subscriber additions in April, there has been an onslaught of punditry about the demise of streaming which runs counter to many of our numbers and forecasts. We estimate 89 million U.S. paid streaming subscriptions were added in 2021 and forecast 80 million additions in 2022, and 50 million in 2024, all highly robust.

For the most part, streaming is a replacement for TV subscriptions, as well as for box office, packaged sales and rentals. With 6 million to 7 million U.S. TV subscriber losses per year — double the annual losses of a half-decade ago — TV is the gift that keeps giving for the streaming business. Between cord-cutters, cord-nevers and those who still subscribe to traditional TV, the penetration rate of households that pay for streaming is higher than it ever was for television.

At its apex in 2016, U.S. TV access and advertising was a $181 billion business, versus $158 billion in 2021. Based on our forecasts, it will tally $140 billion in 2024 and $105 billion in 2027. That’s not a pretty growth picture.

Meanwhile, U.S. streaming access revenue grew 37% to $39.4 billion in 2021, and we forecast revenue of $51 billion in 2022 and $69 billion in 2024. At its current run rate, streaming access revenue will be over $91 billion in 2027 and, when combined with TV programmers’ streaming advertising revenue, would be larger than the legacy TV business.

Assuming TV subscribers continue to decline at 6 million to 7 million per year, TV access providers will be effectively disintermediated by their programming suppliers. Hence within a decade, traditional TV will no longer exist and streaming will be the only show, game or movie in town.

Programming and now streaming behemoths The Walt Disney Co., NBCUniversal, Paramount Global and Warner Bros. Discovery are all seeing impressive streaming subscriber gains but at the cost of lackluster TV advertising and programming sales revenue growth. At the same time, they’re being constrained by Amazon, Apple, Google and Netflix, which together represent almost half of U.S. streaming access revenue.

Further, these major programmers will not reach, based on their own forecasts, streaming profitability until 2024-2025, as content spend has grown exponentially to keep up with Amazon, Apple and Netflix.

Programmers’ profitability predicament has been punished by Wall Street with stocks down on average over 40% year over year, not that Amazon or Netflix have fared any better. Further, Netflix was cash flow positive for the first time in 2020, but not in 2021, and we assume on a standalone basis Amazon and Apple’s streaming businesses are not profitable. 

Consumer Benefit, Provider Pain

Thus far, the only real beneficiary of streaming has been the consumer, who between paid and advertising-supported streaming can now assemble programming at lower cost than a TV subscription. Given the lack of stickiness of most streaming offers, consumers can also easily sign up and then churn off subscriptions. Streaming has also ushered in a massive rise and diversity of programming.

How much streamers raise prices, add advertising or limit free viewing going forward remains to be seen.

That streaming is only going to become more pervasive and end TV as we know it does not mean streaming is a great business for most.

All numbers in this article are from Convergence’s annual Couch Potato report series. 

In what could be the “new normal,” about 1.1 million pay TV customers cut the cord in 2015, a four-fold increase over 2014, when the industry lost about 283,000 subscribers, according to Canadian research company Convergence Consulting.

In its annual pay TV report – The Battle for the North American Couch Potato – Convergence estimated the number of cord cutters will remain about 1.1 million in 2016 and beyond. Fueling the debate, Convergence president Brahm Eiley said in an interview last week, is the proliferation of over-the-top service providers and the entrance of distributors like Verizon and AT&T into the OTT arena, which had until a few years ago been primarily a content play.

“People that were part of linear TV packages are now part of non-linear packages,” Eiley said. “It’s a free-for-all.”

The popularity of OTT is evident in the growth rates of the services. While OTT revenue is still minuscule compared to pay TV revenue, OTT providers are growing at 10 times the pace of operators. Pay TV revenue grew 3% in 2015 to $105 billon, Convergence said, and should rise another 2% to $107 billion in 2016. OTT services generated $5.1 billion in revenue in 2015, up 29%, and are expected to grow 30% to $6.7 billion this year.

Eiley added that while the market has potential for more fragmentation, linear TV still has significant runway left.

Content could prove to be the big differentiator, and traditional TV companies are expected to keep up the spending pace. Convergence said traditional networks spent about $53.1 billion on content last year (up 8%), while new players like Amazon, Apple and Netflix spent an estimated $7.1 billion in 2015, up 27% over the prior year. Increased spending is expected to continue for both sectors, with traditional networks shelling out $57.2 billion for programming this year (up 7.7%), while non-linear providers will spend $8.7 billion, up 22.5%.