Spending on video services in the United States is set to fall by 2027

The average annual spend per household on video services in the United States is set to fall by 8% by 2027, according to the latest research from Ampere Analysis. In fact, Ampere says that 2023 will become known as the year when per-household spending on subscription streaming services in the country could no longer compensate for the continued decline in pay TV and spend on video begins to shrink.

●  US SPENDING TO FALL AS CONSUMERS DROP PAY TV

Annual bills for video content peaked at US$1.146 per household in the United States in 2022 with a post-pandemic bounce-back in theatrical expenditure and an 18% year-on-year increase in SVOD outlay to US$374 per household per year. This year, however, will see US SVOD revenue growth slowing, hindered by market maturity and economic pressures.

The added impact of cord-cutting will see yearly pay TV investment per average household fall below US$650 for the first time since 2006. The result is likely to be the beginning of a slow decline in annual average household expenditure on TV.

●  IN EUROPE, HOUSEHOLD PAYMENTS ON VIDEO SERVICES CONTINUE TO RISE

Meanwhile, in Western Europe, where the pay TV market is stable, increasing demand for SVOD services will drive an 11% increase in household expenditure on video by 2027. In fact, Norway’s per household spend on video is set to overtake the United States in 2025, the first Western market to do so. Norwegian homeowners will each be spending over US$50 more on video than US households by 2027, almost US$300 more than the average UK home, and substantially more than those in Germany, France, Spain and Italy.

“Spend on video has finally hit its limit for US households. As the US subscription OTT market edges closer to saturation point and demand for pay TV continues to fall, annual spend per household on video services has tipped into decline. By 2027, unless streaming services can sustain significant price inflation, US households will be investing almost US$90 less per year on video services,”  said Maria Dunleavey, Senior Analyst at Ampere Analysis and the author of the report.

“Recent moves from TV groups to focus on hybrid tiers and free ad-supported video services represent one approach to compensating for this downward pressure. By contrast, in Western Europe, pay TV expenditure is more stable and the expansion of SVOD continues to drive spend on video. For US groups, capitalizing on this international growth is increasingly key given the pressures on domestic income,”  Dunleavey added.