One business the Coronavirus might not affect is the streaming video business, according to a new report from Convergence Research Group.
Looking at 77 over-the-top services, led by Netflix, Hulu and Amazon, Convergence Research Group estimates that OTT access revenue will grow 29% to $28.5 billion in 2020.
That growth comes on top of a 35% gain to $22 billion in 2019. The company expects revenues to hit $44.2 billion in 2022.
At the same time, Convergence Research’s Couch Potato reports find that traditional TV is vulnerable.
U.S. Cable, satellite and telco TV access revenue was down an estimated 3% to $100.4 billion in 2019. The group forecasts a 6% drop to $94.8 billion in 2020. The slide will accelerate in 2021 and 2022, the report adds.
Convergence Research estimates that 36% of U.S. households did not have a traditional pay TV subscription at the end of 2019. It sees that growing to 42% by the end of 2020 and by 2022, 54% of households--more than half--won’t have a cable, telcom or satellite subscription.
“With programmers having jumped in with both feet, and Apple, DAZN, and Quibi joining Netflix & Amazon’s spending parade, the OTT arms race has truly begun,” the TV Couch Potato report said. “We believe Netflix no longer has the same flexibility to raise pricing as frequently as it has in the past. Alternatively, Amazon and Apple have the luxury of expensing OTT programming as an additional operating cost to their core businesses. Amazon has clearly demonstrated its programming commitment to OTT, it remains to be seen if Apple is willing to endure the long-term spending campaign required to become a key OTT player.”
The report notes that some programmers have stopped supplying Netflix and Amazon with programming in order to build their own streaming offerings.
“While Disney+ and ESPN+ quickly exceed their subscriber target forecasts, Hulu which has seen subscriber growth through price discounts and major programming outlays (Hulu spends more on content/sub than either Amazon or Netflix) remains unprofitable and it is unclear what programming supply will look like in the medium-long run,” the report said.
Meanwhile more services are on the way from AT&T, Comcast, ViacomCBS and Discovery.
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