Streaming Revenues Set to Overtake Pay-TV For the First Time in 2024
Streaming Revenues Set to Overtake Pay-TV For the First Time in 2024
Streamers will celebrate an important milestone this year, and by 2028 pay-TV revenues will fall to half of what they were in 2017.
No matter the angle that the picture is observed from, it’s hard to deny that 2024 will be a big year for many streamers. Most services like Disney+, Hulu, and Peacock are either due to hit peak losses or actually turn a profit at some point this year. Now, new data from Ampere Analysis shows that streaming services are due to achieve another milestone in 2024; this year, streaming revenues are forecasted to surpass pay TV for the first time in history.
- Pay-TV revenues peaked in 2017, but by 2028 they’ll be half of what they were at their height.
- Streaming subscriptions surpassed pay-TV in 2016, but the lower revenue per user on streaming platforms have held revenues back.
- Streaming ad revenues are expected to surpass $9 billion now that Amazon has put ads on Prime Video.
Individual streaming subscriptions have long outnumbered pay-TV accounts, primarily due to subscription stacking, which sees consumers sign up for multiple subscription video-on-demand (SVOD) platforms at a time to replace a traditional cable subscription. Streamers first surpassed the number of customers using cable and satellite in 2016, but individual streaming services charge a fraction of what cable plans cost, causing financial problems for the media companies behind the streamers. The average revenue per user (ARPU) of streaming providers is much lower than that of cable distributors, so it has been a long, uphill battle for these services to increase revenue.
Ampere’s data predicts that streaming revenues will surpass pay-TV income in the third quarter of this year, thanks in part to the further maturation of streaming, ad-supported tiers, paid-sharing pushes, and bundling. Revenue for cable and satellite companies will continue to fall, and by 2028 will be half the value of what traditional pay-TV distributors were pulling in at cable’s height in 2017.
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How Have Streaming Revenues Finally Climbed Above Pay TV?
The enhanced focus on profits has helped streaming services boost their revenues precipitously in the past year. The shift in priorities from subscriber gains to profitability in the past 18 months has been well documented by The Streamable’s experts, and just last week Warner Bros. Discovery reported that its streaming services Max and discovery+ netted a profit of over $100 million last year, becoming the first legacy studio streamers to make money.
The onset of ad-supported streaming plans has also helped streaming revenues to increase. Ampere notes that revenues from ad-supported tiers will surpass $9 billion in 2024, aided by Amazon’s decision to force all customers of Prime Video to either accept ads on their current streaming tier, upgrade to an ad-free plan or cancel their subscription in late January. Amazon does not publicize how many customers it has on Prime Video, but estimates have placed the number in the hundreds of millions. Password-sharing crackdowns are starting to have their effect as well, and Disney will be the next company to stop customers from sharing streaming accounts.
It wasn’t immediately clear if Ampere’s numbers for streaming revenue include live TV streaming services, but if they do it’s clear that YouTube TV has made a significant contribution to the success of streamers. YouTube TV recently announced it had 8 million customers, making it larger than most cable providers in the United States in terms of total customers.
The data supports a report from Digital TV Research which became public last week. That report shows that pay-TV distributors will lose 49 million customers in the U.S. alone by 2029, which could cause streaming prices to skyrocket as providers attempt to replace their lost revenues.
“Most major streaming services in the US have launched their hybrid advertising tiers, which, along with increasing clamp-downs on password sharing, have been successful at reigniting growth in the streaming market,” said Ampere analyst Rory Gooderick. “There is still a way forward for pay TV, however. Disney and Charter’s recent deal in the US, which gave almost 15 million Charter subscribers access to Disney+’s advertising tier, shows how the two businesses can work together to maximise streaming’s reach to domestic subscribers, and highlights the importance of traditional distribution platforms as service aggregators. Longer term contracts and the reduction in churn makes this an attractive proposition for streamers, while control over the billing relationship also means there’s something in it for the pay TV provider too.”
Prime Video
Prime Video is a subscription video streaming service that includes on-demand access to 10,000+ movies, TV shows, and Prime Originals like “The Lord of the Rings: The Rings of Power,” “Jack Ryan,” “The Marvelous Mrs. Maisel,” “The Boys,” and more. Subscribers can also add third-party services like Max, Showtime, STARZ, and dozens more with Prime Video Channels. Prime Video also offers exclusive live access to NFL Thursday Night Football.