Advanced Television

Forecast: US SVoD revenues to match pay-TV by 2027

May 25, 2023

Annual revenues of US SVoD services are forecast to nearly equal those of traditional pay-TV in 2027, marking a critical tipping point in the ongoing decline of cable TV, IPTV, and satellite TV services as streaming rises to dominate the media landscape. Revenues from SVoD services such as Netflix, Prime Video and Hulu are forecast to increase from nearly $47.6 billion in 2022 to $64.6 billion in 2027, recording a compound annual growth rate (CAGR) of 6.3 per cent, according to GlobalData, the data and analytics company.

According to GlobalData, the dynamic growth of SVoD services will contribute to the ongoing decline of traditional pay-TV in the US, as pay-TV revenues plummet from $88.5 billion in 2022 to less than $65 billion in 2027, registering a negative CAGR of 6 per cent. SVoD’s household penetration, having already reached a huge 260 per cent in 2022 thanks to households subscribing to multiple SVoD services, will jump to 312 per cent in 2027.

Meanwhile, pay-TV’s US household penetration rate will slide from 47 per cent in 2022 to 33 per cent in 2027, with ongoing declines registering across cable TV, broadband-delivered IPTV, and DTH/satellite TV subscriptions as the ranks of ‘cord-cutters’ and ‘cord-nevers’ grow unabated. Young adults who have never subscribed to cable or satellite TV make up the cord-nevers, while older users who are turning away from traditional pay-TV in favour of streaming services are considered cord-cutters.

Tammy Parker, Principal Analyst at GlobalData, commented: “SVoD was already on an impressive upward trajectory, but the addition of live sports programming is changing audience viewing habits even more, helping drive additional pay-TV cord-cutting and SVoD growth. Just this month, the National Football League and NBCUniversal announced that the Peacock streaming service will air the first-ever exclusive live streamed NFL postseason game in January 2024, when it presents an NFL Wild Card Playoff. ESPN is also reportedly eyeing a standalone direct-to-consumer (DTC) streaming version of its flagship channel.”

There is some good news for traditional pay-TV service providers, as GlobalData anticipates their monthly average revenue per subscriber (ARPS) will remain strong. US pay-TV ARPS reached $113.49 in 2022 and is expected to rise to $118.34 in 2027, thanks largely to price increases by cable TV and satellite TV providers. US SVoD providers, meanwhile, will see low, but stable ARPS over the next few years, as the sector’s monthly ARPS of $12.16 in 2022 will increase just slightly to $12.79 in 2027. SVoD price increases will be reined in due to heated competition, as well as the increased use of ad-supported tiers, plans with limited content, and monthly and temporary discounts. Additionally, as inflation moderates, there should be less pressure on SVoD providers to dramatically raise prices.

Parker concluded: “GlobalData expects Netflix to continue to dominate SVoD revenue market share, attracting about three times as much revenue as Amazon Prime, and twice as much as Hulu (SVoD only, without live TV) each year through 2027.”

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