Forecast: Spending on US streamers to slump
March 7, 2023
The average annual spend per US household on video services is set to fall by 8 per cent by 2027 according to research from Ampere Analysis.
2023 will become known as the year when per-household spending on subscription streaming (SVoD) services in the US could no longer compensate for the continued decline in pay-TV and spend on video begins to shrink, predcits Ampere Analysis.
US spending to fall as consumers drop pay-TV
Annual bills for video content peaked at $1,146 (€1,075) per household in the US in 2022 with a post-pandemic bounce-back in theatrical expenditure and an 18 per cent year-on-year increase in SVoD outlay to $374 per household per year. 2023, however, will see US SVoD revenue growth slowing, hindered by market maturity and economic pressures. The added impact of cord-cutting will see yearly pay-TV investment per average household fall below $650 for the first time since 2006. The result is likely to be the beginning of a slow decline in annual average household expenditure on TV.
In Europe, household payments on video services continue to rise
Meanwhile, in Western Europe, where the pay-TV market is stable, increasing demand for SVoD services will drive an 11 per cent increase in household expenditure on video by 2027. In fact, Norway’s per household spend on video is set to overtake the US in 2025, the first Western market to do so. Norwegian homeowners will each be spending over 50 dollars more on video than US households by 2027, and almost $300 more than the average UK home, and substantially more than those in Germany, France, Spain and Italy.
“Spend on video has finally hit its limit for US households,” advises Maria Dunleavey, Senior Analyst at Ampere Analysis. “As the US subscription OTT market edges closer to saturation point and demand for pay-TV continues to fall, annual spend per household on video services has tipped into decline. By 2027, unless streaming services can sustain significant price inflation, US households will be investing almost 90 dollars less per year on video services. Recent moves from TV groups to focus on hybrid tiers and free ad-supported video services represent one approach to compensating for this downward pressure. By contrast, in Western Europe, pay-TV expenditure is more stable and the expansion of SVoD continues to drive spend on video. For US groups, capitalising on this international growth is increasingly key given the pressures on domestic income.”