8 MAR 2024

USA: OTT will account for more than half of video subscription revenues by 2025

The data comes from a study by the research firm Emarketer. Netflix continues to lead, but Disney's combination of companies is closing in on it. The OTT revenues will surpass traditional pay TV subscription revenues in 2025 for the first time.

8 MAR 2024

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According to the US-based research firm Emarketer, OTT services are projected to constitute more than half (53.5%) of video subscription revenues in the United States by 2025, reaching $71.92 billion, as indicated in its December 2023 forecast.

To provide more clarity, Emarketer predicts that US OTT subscription revenues, which include digital pay TV services like YouTube TV and Sling TV, will surpass traditional pay TV subscription revenues in 2025 for the first time. Traditional pay TV subscription revenues are expected to continue declining until the end of the forecast period in 2027. Additionally, it's worth noting that the growth of OTT subscription revenues will slow to single digits next year as streaming approaches a saturation point. This is particularly noteworthy given that subscription OTT viewers are expected to make up almost three-quarters (73.8%) of internet users this year.

How is the loot divided? Netflix continues to lead, but its growth is slower than that of some immediate competitors. Translated into numbers, this means that Netflix will generate over $14 billion in US OTT subscription revenues this year, surpassing any other company. Disney will come closest to Netflix, but only after combining Disney+, Hulu, and ESPN+ revenues. Netflix will represent over one-fifth of total OTT subscription revenues this year, with no other service coming close.

What about the competition's growth? Rivals are chipping away at Netflix's share of industry revenues. While Netflix's subscription revenues are growing, they aren't growing as quickly as the rest of the industry. According to the consulting firm's report, between 2020 and 2025, Netflix's share of total US OTT subscription revenues is projected to shrink from 32.4% to 21.3%. This shift has occurred as YouTube and Paramount+ expanded their share of OTT subscription revenues, and the emerging businesses of Peacock and Apple TV+ found larger audiences.

What strategy has Netflix decided to employ in this context? Broadly speaking, it's wielding the power of policing: the company is extracting more money from its viewers. Netflix's US audience is saturated; the service will reach over three-fourths of US subscription OTT users this year. To generate more revenues from its consumers, Netflix has restricted password-sharing and continued to raise subscription fees. In a complementary move, Netflix has also adopted advertising after avoiding it for years.