Laura Martin, Senior Media Analyst at investment bank Needham & Co., has estimated that as ‘TV Everywhere’ services are rolled out over the next three to five years, they could add $12 billion in annual revenue to the US TV ecosystem.
According to Martin, revenue of the US television ecosystem in 2012 will total approximately $165 billion, made up of approximately $85 billion of subscription and license fees paid to cable, satellite and telephone companies plus approximately $80 billion of TV advertising, according to PWC. “We estimate that the roll-out of TV Everywhere over the next 3-5 years could add approximately $12B of revenue annually to the US television ecosystem. These dollars dwarf any near-term revenue streams from digital platforms (Hulu, YouTube, etc). Additionally, these are low risk dollars as adding services to the TV bundle suggests additional revenue rather than economic cannibalization,” she wrote in a report.
“We calculate the value creation from TV Everywhere as follows: 1) Content Owners. We calculate that TV Everywhere could add approximately $10B/year of advertising revenue (12% of total) to the largest public content companies. Time Warner and Disney should be the biggest beneficiaries because they are the furthest ahead at rolling out TV Everywhere; 2) TV Distributors. In addition, TV Everywhere could add approximately $1.7B per year of revenue (an extra 2% annually) to the cable, satellite and telco distributors owing to incremental pricing power driven by new services. Comcast and Time Warner Cable are key beneficiaries as they lead the industry in TV Everywhere adoption,” she advised.