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May 25, 2023
The rise of subscription streaming video in the U.S. and the decline of pay-TV are about to intersect. New data from London-based GlobalData finds that annual SVOD revenue will nearly equal that of traditional pay-TV by 2027, marking a critical tipping point in the ongoing decline of cable and satellite TV, and the inability of online TV to offset that loss.
GlobalData suggests revenues from SVOD services such as Netflix, Prime Video, Disney+, Max, Paramount+, Peacock and Hulu are forecast to increase from nearly $47.6 billion in 2022 to $64.6 billion in 2027. At the same time, pay-TV revenue will drop from $88.5 billion in 2022 to less than $65 billion.
SVOD household penetration will increase from 260% to 312% due to households subscribing to multiple streaming services. At the same time, legacy pay-TV U.S. household penetration rate will decline from 47% in 2022 to 33% in 2027.
“SVOD was already on an upward trajectory, but the addition of live sports programming is changing audience viewing habits even more, helping drive additional pay-TV cord-cutting,” Tammy Parker, principal analyst at GlobalData, said in a statement.
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.
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Meanwhile, GlobalData suggests there remains a silver lining for pay-TV. The monthly average revenue per subscriber (ARPS) will remain strong, increasing to $118.34 per month in 2027 from $113.49 in 2022, due largely to price increases. By comparison, SVOD providers will see ARPS reaching $12.79 monthly from $12.16 in 2022 — due largely to the increased use of ad-supported tiers, less expensive subscription plans with limited content, and monthly and temporary discounts.
“GlobalData expects Netflix to continue to dominate SVOD revenue market share, attracting about three times as much revenue as Prime Video, and twice as much as Hulu each year through 2027,” Parker said.