Recent research released by Strategy Analytics, reveals that consumers will spend a greater average on streaming service than Pay TV services by 2024.“The revenue picture gives the best illustration of the relative strength of new and old businesses.” Michael Goodman, director, TV and media strategies at Strategy Analytics, said. “The fact that viewers are willing to divert an ever-increasing share of their entertainment wallet away from pay-TV and towards new internet-based services demonstrates that the future lies with streaming video services rather than legacy pay-TV players. “
The report notes that consumer spending on traditional pay-TV services fell by 8% to $90.7 billion in 2020 and will decline further to US$74.5 billion in 2024. Spending on streaming services by contrast increase by 34% in 2020 to US$39.5 billion and is projected to reach the US $76.3 billion in 2024. The report also estimates that by 2026, pay-TV will account for only 40% of spending on video and TV services, in comparison to 81% a decado ago.
The balance shift in revenues correlates with the massive cord-cutting influx. According to recent projections from S&P Global, the overall rate of subscriber decline for U.S. pay-TV operators will hit 4.5% in 2021 and 6% in 2022. The company is predicting growth among vMVPDs will slow as the total legacy pay-TV market, including cable, satellite, and telco, gas gone up to a 10.3% yearly rate of subscriber declines next year.
According to the researcher, growth metrics in subscription video-on-demand usually prioritize numbers of subscriptions, but this ignores what matters most - money. Despite the many challenges it has faced, pay-TV still commands much higher monthly revenues from its declining base of customers than from any single SVOD service. Nevertheless, as more households add new SVOD services while cutting the pay-TV cord, revenues will inevitably shift further away from legacy pay-TV.