The Great Streaming Recession is just not a thing.
U.S. consumer spending on subscription streaming jumped 17.3% in 2022, surpasing $30.3 billion.
This latest year-over-year growth, reported by the Digital Entertainment Group (DEG), comes after domestic SVOD spending expanded by nearly 20% in 2021 and 37% in 2020.
Where does $30 billion plus rank a sector in terms of the overall domestic entertainment business pie? Consider that North American theatrical releasing generated $7.36 billion last year, according to Box Office Mojo.
The U.S. broadcast station industry was projected by S&P Global Market Intelligence to reach $36.47 billion in ad revenue in 2022.
By 2027, Research and Markets predicts that the North American pay TV revenue will be roughly half of what it was at its peak in 2014, sized roughly at $53 billion.
So the sector that many large entertainment companies are pulling back from quite a bit these days could soon be their industry's biggest money generator.
Granted, growth is decelerating a bit.
In the fourth quarter alone, SVOD providers generated over $7.9 billion in U.S. revenue, a 15.4% uptick. In the Q4 2021, domestic SVOD spending expanded by 19.25%.
But the notion that having more than eight major SVOD competitors vie for consumer attention has saturated a market dealing with inflation and other economic pressures? It doesn't appear at all to be true.
Of course, with major suppliers like Warner Bros. Discovery cutting back on content while raising prices, who knows if SVOD's revenue growth will hold in 2023. But it certainly didn't drop into a recessionary hole last year, as many of us expected it might after Netflix delivered its "Black Tuesday" April 19 Q1 earnings report.
DEG is a legacy research component of what used to be known in the halcyon days of Blockbuster Video as "home entertainment," and it still mainly gets its data directly from entertainment company suppliers. The SVOD information, however, comes from Informa research unit Omdia.
From "packaged goods" sell-through revenue (sales of DVDs and Blu-rays were down 20% to around $1.6 billion in 2022) to total movie and TV show rentals (down nearly 15% to $2.2 million), not even the savior that was Top Gun: Maverick could boost the erstwhile "homevid" industry from losing altitude last year.
Notable was the 14% drop in "VOD" sales to $1.6 billion. This sector includes transactional streaming rentals from Amazon, Google, Vudu and countless other internet suppliers, as well as pay TV on-demand rentals.
The transactional streaming business still seems to be growing, at least narrowly. "Electronic sell-thru" still grew last year by 1.65% to just over $2.5 billion.
We suspect it's the declines in pay TV movie rentals that's dropping the whole VOD bottom line, with the linear cable and satellite business shedding customers like never before, and more and more customers finding what they want within their SVOD smorgasbords.
Click on the arrows icon below to expand and see DEG's full-2022 chart.
