Analysis: Global Subscription Streaming Revenues Will Match Pay-TV by 2027
Ever since Hulu first began offering subscription video streaming way back in 2007, the writing has been on the wall for cable and satellite providers. Streaming was easy to dismiss as a fad at first; how could one streaming service possibly break up the hegemony of pay TV?
But closing in on 20 years later, streaming revenues will match the amount of money cable and satellite companies bring in. That’s according to Advanced TV, which cites an analysis from the analytics company GlobalData that indicates that by 2027 subscription video-on-demand (SVOD) revenues are expected to climb from $47.6 billion to $64.6 billion, while pay-TV revenues will drop from $88.5 to around $65 billion.
Penetration of households by pay TV will decrease as well, from 47% in 2022 to 33% in 2027. By contrast, stacking will cause SVOD’s household penetration to increase from 260% to 312%.
“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,” GlobalData’s Tammy Parker said. “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 Wildcard Playoff. ESPN is also reportedly eyeing a standalone direct-to-consumer (DTC) streaming version of its flagship channel.”
GlobalData’s numbers seem to rely on the continuation of a trend of major sports shifting from broadcast to streaming. The NFL has indeed shown a willingness to make more of its games streaming exclusives; in addition to an exclusive playoff game on Peacock, the league will air an international game exclusively on ESPN+ once again in 2023.
A standalone, streaming-only version of ESPN that does not require a cable subscription to access is on the way as Parker mentions, but it may be a while before such a service is available to the public. Disney has just started negotiating with broadcasters and sports leagues to make such a product possible, and there are myriad issues to be resolved before it can come to market.
Still, there’s no doubt that a streaming platform with the full suite of ESPN offerings will drive streaming revenues up considerably. The high price of live sports rights essentially guarantees that streaming-only ESPN will cost consumers significantly more than what they’re used to paying for even premium streaming services like Max, which will help raise the average revenue floor of streaming.
Sports leaving broadcast is not an immediate process, however. The NFL’s deals with broadcast networks like CBS and Fox run into the next decade, and the NBA is gearing up to sign a new media deal after the 2024-25 season. That agreement will reportedly include a larger package of games for streaming only, but it will invariably have most NBA games for the length of the contract on broadcast channels.
Ad-supported price tiers could also aid in streaming’s fight to match pay-TV revenues by 2027. A recent survey found that in the U.S. alone, 44.5 million people are now subscribed to at least one ad-supported plan on a subscription streaming service. Streaming plans with commercials generate more money per customer than ad-free ones, despite the latter category of plans costing 30%-50% more. Ad revenues kept pay TV afloat for quite a while, but now that money is shifting more and more into the streaming space.
Cable and satellite will continue to linger on life support for decades after streaming revenues pass those of pay TV. Streamers are less focused on slaying the pay-TV dragon these days than they are in straightening out their own bottom lines, but they can look back on the past two decades with pride. Streaming has evolved to an impressive degree in that time, to the point where it is nearly ready to surpass pay TV in terms of revenues generated.
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