Report: U.S. Spending To Favor OTT Services In 2024
The so-called cord-cutting trend that is shifting TV viewership patterns from traditional subscription pay-TV services to over-the-top options, is expected to hit a critical transition point in U.S. consumer spending in 2024.
According to a forecast from media research firm Strategy Analytics, 2024 is the year U.S. viewers will begin spending more on streaming video services than traditional pay-TV subscriptions for the first time.
The firm’s Subscription TV Forecast said consumer spending on traditional pay-TV services dropped 8% to $90.7 billion in 2020 and is on a downward trajectory to $74.5 billion in 2023.
Meanwhile, spending on streaming video services, including Video on Demand (VoD) and internet subscription TV services rose 34% to $39.5 billion last year, on the way to a predicted $76.3 billion in 2024, when it tops traditional pay-TV revenue.
The report goes on to predict U.S. pay-TV services will continue to lose share, dropping to 40% of video and TV spending by 2026, a fall from 81% 10 years prior.
The trend marks an important milestone that is fueling the continued importance of streaming services to content production, aggregation and distribution going forward.
“Growth metrics in subscription video-on-demand (SVOD) usually focus on numbers of subscriptions, but this ignores what matters most – money,” the research firm said of the study. “In spite of the many challenges it has faced, pay TV still commands much higher monthly revenues from its declining base of customers than from any single SVOD service. Nevertheless, as more households add new SVOD services while cutting the pay TV cord, revenues will inevitably shift further away from legacy pay TV.”
“The revenue picture gives the best illustration of the relative strength of new and old businesses,” stated Michael Goodman, Director, TV & Media Strategies. “The fact that viewers are willing to divert an ever-increasing share of their entertainment wallet away from pay-TV and towards new internet-based services demonstrates that the future lies with streaming video services rather than legacy pay-TV players. This is a long-term transition, but there is no doubt that the writing is on the wall for pay-TV as we have known it for more than 40 years.”
Online purchases made using links provided on this site might generate a small commission for HD Guru.com. We thank you for your support!
By Greg Tarr
Have a question for the HD Guru? HD GURU|Email
Copyright ©2021 HD Guru Inc. All rights reserved. HD GURU is a registered trademark.