Convergence Research Group estimated that over-the-top revenue in the U.S. rose 37% in 2021 to $39.4 billion and is expected to nearly double to $69 billion by 2024, as subscriber additions, about 80 million this year, should level off to 50 million by 2024. 

According to its just-released report -- The Battle for the American Couch Potato, which analyzed more than 75  OTT services (and over 50 providers) including Netflix, Disney Plus, Hulu, Amazon Prime Video and Warner Bros. Discovery -- Convergence said it expected U.S. OTT revenue to rise about 30% to $51 billion in 2022. 

At the same time, revenue and subscribers for traditional linear TV will continue their steady decline. Convergence said U.S. cable, satellite and telco TV access revenue fell 4% in 2021 to $91 billion, and should drop another 6% to $85.5 in billion in 2022, with further slippage in 2023 and 2024. Total U.S. TV subscribers dipped by 6.5 million in 2021, about the same as 2020, according to Convergence. That number should pick up to a loss of 7 million subscribers in 2022 and 7.2 million in 2024. 

The percentage of cord cutter/never households also should increase. Convergence estimated that  47% of U.S. households did not have a TV subscription with a cable, satellite or telco TV provider in 2021, rising to 53% in 2022 and 64% by 2024. 

Broadband customer growth is continuing to slow -- Convergence estimated that about 3.7 million high-speed internet subscribers were added in 2021, down  from 5.1 million in 2020, while revenue grew 10% to $79.6 billion. The researcher predicts that total broadband subscriber additions will tick up to 4.3 million (with a 7% revenue boost) as telco and fixed wireless additions improve, offsetting any sluggishness on the cable side.■

Revenue from over-the-top streaming TV providers like Netflix, Hulu, Amazon Prime Video and HBO Max rose 35% to $29.6 billion in 2020, and could double to nearly $60 billion by 2023, according to Convergence Research Group’s 2021 The Battle for the American Couch Potato report. 

At the same time, linear revenue from cable, telco TV and satellite TV dipped 6% to $94.7 billion, according to Convergence, and is expected to fall another 6.5% in 2021 and by 10% in 2023. Driving that decline is the continued erosion of traditional pay TV subscribers. Convergence estimated traditional TV lost about 6.49 million subscribers in 2020, and will shed 7.35 million in 2021. The research company estimates that in 2023, those pay TV outlets will lose another 7.76 million customers.  

Convergence based its analysis on 80 OTT providers, including Netflix, Hulu, Amazon Prime Video and HBO Max. The research company said it expects the average number of OTT subscriptions per household, currently at three, will grow to five by 2023. That coincides with Convergence’s prediction that the number of homes without a cable, satellite or telco TV subscription will grow from 42% in 2020 to 60% by 2023.

“Pressure on programmers and TV access providers to keep up spending in order not to lose programming primacy shows no signs of abating,” Convergence said in the report. “Major programmers face a complicated trajectory, not only in terms of competition but balancing their linear & OTT programming, advertising, theatrical distribution, as well as DTC OTT businesses. Though in decline, traditional US TV access, advertising, programming is still a $220 billion business.”  

Well over a decade ago, we began charting the rise of TV cord-cutting.

In the beginning our models were crude, relying on failure to reach projected growth in TV subscribers and not decline.

Being among the first comes with privileges, but it also comes with slings and arrows.

Here’s an email we received in the early days from a media company executive:

“There is absolutely no credible evidence of multichannel cord-cutting in favor of online, Netflix or OTT video in the U.S. On a year-to-year basis, subscription to multichannel TV and multichannel TV with broadband in the home have grown. Nielsen data shows that the very small number of people who have cut the cord are predominantly very low-income and are far overshadowed by those who added cable and broadband despite the weakness of the economy, the decline in home ownership and continued high unemployment. We are seeing no evidence of systemic weakening of demand for multichannel television. TV viewing continues to grow and online viewing is still just 1% of overall viewership. Our own research shows that those who claim to have ‘cut the cord’ are no more likely to be Netflix subscribers or online ‘porters’ than the general population. Conversely, Netflix subs and those who claim to view online video OTT are heavy consumers of all video, including television, and are much more likely than the population to be multichannel video subscribers.”

Despite the critiques, we carried on. However, in 2014 it was becoming clear to us that our cord-cutter model had to change. Cord-nevers were becoming as large a phenomenon as cord-cutters, hence when young adults left the house they were no longer subscribing to TV as they had been before, so our model became a cord-cutter/cord-never model.

The U.S. TV base declined by 1.3 million TV subscribers in 2015, four times the decline of 2014. In 2016, there were 2.3 million losses, while 2018 reached 4 million and 2019 rose to 6.4 million. Based on our model, as of year-end 2019, 36% of U.S. households did not have a traditional TV subscription, double a decade prior.

Despite its perennial low operating income margins, Netflix has certainly proven the critics wrong. As of 2019 every major programmer was in the market with an OTT offer or planning to launch one.

With or without COVID-19, we had and have been forecasting mounting declines in U.S. TV subscribers, accelerated growth in cord-cutters/cord-nevers and formidable rises in OTT revenue for 2020 and beyond. Extending out forecasts to year-end 2025 from year-end 2019, demonstrates a decline of more than 50% of TV subscribers, over 40% of annual TV access revenue, while cord cutter/never households and OTT access revenue more than double.

No doubt these are devastating numbers for the TV business.

Nevertheless, and in respect to our critics from the early years, we are troubled by the recent quarter-by-quarter TV death-watch analysis. If COVID-19 has taught us anything, it is that conditions and variables change.

Blanket statements such as “cord-cutters are never coming back to TV subscriptions even if sports returns” make no sense. A return of sports would clearly help TV subscriber numbers, though their return would also help sports OTT numbers.

Further, we do not believe that low OTT prices are sustainable, more so if a significant portion of programming sales and advertising revenue are going to be destroyed by the decline of traditional TV access. In this regard, it still unclear what strategies programmers, OTT and TV access players will pursue going forward.

Without a doubt, parts of the decline of TV and the rise of OTT story have yet to be written. This is not a story set in stone, just like no one could have foreseen a year ago that we would be social distancing.

So we remain open to the possibility that there might be, as Grace Paley once wrote, “enormous changes at the last minute.”

Otherwise, based on our model’s trajectory, TV will be dead by 2030.

Brahm Eiley is the president of The Convergence Research Group, a research & consulting firm. All numbers from Convergence’s annual “Couch Potato Report” series.

Canadian research firm Convergence Research Group expects over-the-top revenue to grow 29% in 2020, with overall streaming service revenue to nearly double by 2022.

While the COVID-19 pandemic has squelched nearly every business sector in the country, streaming video has held its own. In its annual North American Couch Potato report, Convergence estimated that domestic OTT access revenue rose by 35% in 2019 to $22 billion, and is expected to rise another 29% to $28.5 billion in 2020. Fueling the growth is the surge in the number of OTT offerings from direct-to-consumer services like Disney+, Apple TV+, and upcoming offerings from NBC (Peacock) and AT&T (HBO Max). Convergence based its estimates on 77 OTT services (more than 50 providers), led by Netflix, Hulu, and Amazon. The researcher predicts OTT access revenue will increase 55% to $44.2 billion in 2022.

“Our forecasts assume the coronavirus will not be as major a disruptive force beyond 2020,” Convergence wrote in the report.

Related: Disney Plus Tops 50M Subscribers Worldwide

Convergence sees at least some of that OTT growth coming at the expense of traditional pay TV. The researcher estimated that U.S. pay TV subscribers declined by 6.358 million, more than the 4.034 million lost in 2018. Convergence sees that trend continuing, with 2020 pay TV customer declines expected to be 7.097 million in 2020 and 7.475 million in 2022.

Convergence also estimated that at the end of 2019 45.42 million U.S. households did not have a pay TV subscription, up from 38.22 million in 2018. For 2020, the company estimates 53.35 million won’t have a cable, telco or satellite pay TV subscription, rising to 69.63 million by 2022.