Streaming Revenue Set to Eclipse Pay TV in 2024, Ampere Analysis Forecasts
In a groundbreaking shift within the entertainment industry, streaming services are expected to surpass pay TV in revenue by the third quarter of 2024, signaling a monumental pivot in how audiences consume media. This significant transition is primarily fueled by the rising prominence of ad-supported streaming platforms, as highlighted by a recent report from London-based research firm Ampere Analysis.
The firm’s latest analysis underscores a dynamic shift in the entertainment landscape, with streaming not only poised to overtake traditional pay TV subscription models in terms of revenue but also marking a continued trend towards digital consumption over conventional broadcast and cable services. "Streaming will continue to race ahead as traditional pay TV declines – with the value of pay TV in 2028 expected to fall to half the value it saw at its peak in 2017," Ampere Analysis projected in their insightful study released Monday.
Historically, streaming subscribers surpassed pay TV numbers in 2016, yet the average revenue per user (ARPU) for streaming has lingered at roughly a tenth of that generated by pay TV. This gap, however, is set to narrow considerably, with ad-supported streaming revenue anticipated to exceed $9 billion in the U.S. alone this year. A significant driver behind this surge is the introduction of Prime Video’s new ad tier in January, which represents a broader industry trend towards integrating advertising to boost revenue streams without compromising on viewer growth.
Ampere Analysis had previously forecasted in November that global pay TV penetration — the ratio of pay TV subscriptions to the number of households — would witness its first annual decline in 2024. This downturn is expected to be most pronounced in North America and Latin America, with a universal decline across all regions by 2025. This projection points to a widespread transformation in viewing habits and the increasing appeal of streaming services as a primary source of entertainment.
Rory Gooderick, a senior analyst at Ampere, emphasized the evolving dynamics within the industry, noting the strategic moves by streaming platforms and pay TV providers to adapt and thrive amidst these changes. The collaboration between Disney and Charter in the U.S., which provided nearly 15 million Charter subscribers access to Disney+’s ad tier, exemplifies how traditional and digital entertainment platforms can synergize to expand streaming’s reach and appeal to a broader audience base. "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," Gooderick elaborated.
This partnership underscores the potential for coexistence and mutual benefit between streaming services and pay TV, highlighting the importance of traditional distribution channels as aggregators of content and services. As the industry continues to evolve, such collaborations could pave the way for a more integrated entertainment ecosystem, where streaming and pay TV complement rather than compete against each other.
In conclusion, the shift towards streaming as the dominant revenue generator in the entertainment sector is a testament to changing consumer preferences and the adaptability of the industry. With streaming services increasingly incorporating ad-supported tiers and engaging in strategic partnerships, the landscape of television and entertainment is set for a transformative journey ahead. As this trend progresses, it will be intriguing to observe how both streaming platforms and pay TV adjust and innovate to meet the ever-evolving demands of viewers worldwide.