US streaming revenue to overtake pay TV in 2024

Streaming will continue to grow as traditional pay TV declines, said Ampere, which calculated that the value of pay TV in 2028 is expected to fall to half the value at its peak in 2017.

Streaming subscriptions overtook pay TV subscribers back in 2016 in the US, but streaming’s lower average revenue per user (ARPU), which currently sits at around 1/10th that of pay TV, means that revenue is only now catching up.

Ampere noted that a slowdown in the growth of subscriber numbers in markets such as the US and UK has driven a shift in focus from the streamers towards revenue growth profitability.

Read more How to create clearer reporting metrics for ad-supported streaming services

The introduction of cheaper ad tiers has increased new subscriber growth in previously saturated markets, but also acted as an additional revenue source for streaming services.

Revenues from ad tiers will pass $9bn in the US this year, bolstered by Amazon Prime Video’s new advertising tier which launched this quarter.

Rory Gooderick, Senior Analyst at Ampere Analysis, said: “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.

“There is still a way forward for pay TV, however. 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.”

Read more Spatial computing and immersion - a new era for volumetric production