Streaming Video Revenues Hold Steady, Pay TV Sees Sharp Decline
Household spending on online video has held steady since 2014, reports the researchers at Parks Associates: Monthly spending has remained at an average of $8 to $9 since then. If that doesn't sound like much—especially considering how many more offerings there are now—consider that every other area of home video entertainment spending has declined.
Looking only at broadband-enabled homes in the U.S., Parks says average monthly spending on pay TV has gone from $84 in 2014 to $76 in 2018. One-fifth of U.S. homes with broadband don’t have pay TV service. Also, 12% of U.S. homes with broadband cut the cord in 2018.
Other areas showing declines are spending on DVDs and Blu-Rays, as well as movie tickets (which fell by 50% from 2014 to 2018). Considering the options, online video holding steady looks like a win. Traditional pay TV companies are eager to get on board.
"Subscription online video is the only growth category for consumer-paid video entertainment beyond pay TV. Operators, struggling with declining ARPU for standalone pay TV services, are anxious to leverage this trend," notes Brett Sappington, senior research director and principal analyst at Parks. "Operators are taking differing approaches. Some, including Comcast and Dish, are offering subscriptions to third-party OTT video services and are integrating them into their discovery interfaces. Partnering gives operators a chance to serve as content aggregator, a familiar position. Others, including AT&T and Dish, are expanding their competitive reach online and have introduced vMVPD services."
This data comes from 360 View: Entertainment Service in the U.S., available for purchase.
Declining subscriber numbers don't bother today's pay TV executives, who are "cautiously optimistic" their companies can adapt to changing viewer preferences.
A report created by Digital TV Research finds that, for 505 operators in 135 countries, three-quarters will increase their subscribers between 2018 and 2024.
The number of pay TV subscribers will grow by 380 million from 2010 to 2024, but total global revenues will fall by 14% to $177 billion during the same period.
In a major milestone, adoption of the leading SVOD service now beats pay TV. Viewers have more choices than ever, and they're happy about that.
Consumers are comparing high-priced pay TV services with lower-priced streaming plans, and for many streaming wins out.