A new overview report on U.S. streaming (OTT) and pay TV trends highlights continued but slowing growth in streaming revenue, in an analysis of 50-plus providers (80 services) led by Netflix, Disney (including Hulu), Warner Bros. Discovery and Amazon.
Convergence Research puts out yearly reports called The Battle for the American Couch Potato (here's our look at last year's highlights). This report said programmers and independents will continue to essentially split U.S. OTT access (subscriber) revenue. In 2022, U.S. OTT access revenue grew 26% to $49.6 billion, with a forecast of 21% growth in 2023 and a 13% bump in 2025.
Programmers, though, are facing more competition for views and profits and also balancing their pay-TV and streaming businesses along with advertising and theatrical distribution concerns. Growth will be slower in terms of household penetration, subscriptions per household and net OTT subscriptions, at a rate from 2023 to 2025 that's half of the growth from 2020 to 2022. Streamers have been tweaking the subscription offerings in response (and currently are running some deep discounts).
In terms of subscriber growth of streamer accounts, the 2022 estimated growth of 57 million (down from 90 million in 2021) should slow to 45 million added in 2023, 37 million in 2024 and 31 million in 2025, Convergence said. Analyst Brahm Eiley said in an email: "Turbulence for the Networks/Studios is only going to increase going forward as they see less revenue from traditional TV advertising and programming sales and less incremental OTT subscriber additions. Hence there will be continuing pressure on the Networks/Studios to raise streaming subscription prices, add more advertising and keep costs (programming and headcount) contained.”
On the pay TV side of things, Convergence estimated 2022 U.S. cable, satellite and telco TV access revenue declined 6% to $85.8 billion in 2022 and said a 9% decline is in the cards for 2023 (though with average revenue per unit growth of 3%) and a 13% dip will occur in 2025.
In 2022, the report said, U.S. pay TV subscribers declined by 7.37 million (11%) in 2022 and another dip of 8.44 million (14%) is foreseen for 2023. A 16% decline is projected for 2025. As of year-end 2022, almost 70 million U.S. households (over 53% of households) did not have a TV subscription via cable, satellite or telco. Traditional TV access is well into becoming a niche product, Eiley said.
Broadband continues to grow in subscribers (3.2 million) and revenue (6.5% to $84.8 billion) in the U.S. in 2022, the report said. Higher subscriber additions are forecast for 2023 and slightly lower revenue growth. Cable continues to maintain the lions’ share of residential broadband subscribers but cable’s annual share of net additions has fallen precipitously, a trendline projected to continue through 2025 due primarily to T-Mobile and Verizon. [Fixed wireless access accounted for 95% of home broadband growth in Q1 of 2023, Next TV has reported.]
