Report: Streaming Revenues Will Flatten by 2024; What Can Companies do to Maintain Growth?

The narrative around the streaming market in the United States is that it is in a rapid decline, however, adoption and usage continue to grow every day. Companies are trying every tactic that they can think of to attract more cord-cutters, and those tactics are sometimes wildly different than tactics that have worked in the past.

That’s the approach that Disney+ and Netflix are attempting to take; after launching with exclusively ad-free streaming, both services are now adopting ad-supported tiers, which will launch in late 2022 or early 2023. Estimates suggest that both Netflix and Disney+ could see more than $1 billion each in increased revenue from the addition of an ad-supported subscription option.

But the introduction of cheaper subscription plans may not be the enduring financial fix that streaming companies hope for. According to a report from Digital TV Research, as reported by TV Technology, even with lower cost options available to consumers, the revenue growth for subscription video-on-demand (SVOD) services will flatten in the next two years.

The projections show SVOD revenues will grow to $56 billion by 2024, up from $43 billion in 2021. However, after 2024, growth will be nearly flat due to price competition, and the lower ARPU (average revenue per unit) that streaming platforms will be bringing in. People will be spending less on streaming than they are now, unless streaming companies do something to shake up the market.

While the boom period of streaming expansion focused specifically on premium SVOD platforms, much of the growth that the industry is currently seeing is around low-cost ad-supported video-on-demand (AVOD) or free ad-supported TV (FAST) channels. Roughly 60% of households use at least one FAST channel to supplement their streaming services, and that number is growing. Many media companies are beginning to use those types of linear channels to bring more customers to their streaming services, just as NBCUniversal and Paramount have used NBC and CBS to drive viewers to Peacock and Paramount+. In fact, there have been reports that Warner Bros. Discovery could launch FAST channels to complement HBO Max dedicated to the rich Warner Bros. library.

While that could be a possibility for the company, WBD has taken a very different approach when it comes to HBO Max. In the midst of a $3 billion cost-cutting endeavor, the company is cutting shows and movies, and moving others to linear channels owned by WBD.

The use of linear channels by WBD highlights another strategy that streamers are using to try and combat flattened revenue projections, the acquisition of live sports. Bidding for the rights to stream NFL Sunday Ticket continues, with Apple and Amazon considered as frontrunners. Seventy-three percent of customers who stream live sports are cord-cutters, so there’s a lucrative market available to the company that can gather the most live sports under its streaming umbrella.

The flattened revenue projections may spook streaming CEOs, but it could be good news for consumers. Companies will no doubt try every tactic at their disposal to change those plateaued numbers, including moves that will benefit their customers’ wallets and viewing options. Consolidating services, like WBD is doing with HBO Max and discovery+ may also help drive costs down for consumers. It will be fascinating to see how companies continue to use different strategies to try to stave off the flattening of revenue growth.