Total revenues from streaming, including advertising revenue from hybrid streaming subscription tiers, will overtake revenues from pay-TV subscriptions in the United States for the first time in Q3 2024.
New research from Ampere Analysis suggests streaming will continue to race ahead as traditional pay-TV declines. The value of pay TV in 2028 expected to fall to half the value it saw at its peak in 2017
While streaming subscriptions overtook pay-TV subscribers back in 2016 in the United States, streaming’s lower average revenue per user (ARPU), which currently sits at around a tenth of pay-TV, means that revenue is only now catching up.
“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,” says Rory Gooderick, Senior Analyst at Ampere Analysis. He adds that there is still some way to go. “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.”
A slowdown in the growth of subscriber numbers in markets such as the United States and UK has driven a shift in focus from the streamers towards revenue growth, and eventually, profitability. As a result, the introduction of cheaper ad tiers has been successful not only in increasing new subscriber growth in previously saturated markets, but also in acting as an additional revenue source for streaming services.
