Will Streaming Keep the TV Industry Growing?
By Movieguide® Contributor
According to an annual report on the media industry, streaming services will win out over traditional TV as homes continue to cut cords and drop subscriptions to save money.
PricewaterhouseCoopers (PwC) is a multinational company of firms. Among their many projects, they release an annual report on the trends in the entertainment and media industry.
PwC’s annual report details the events of the past year and attempts to determine where the industry is headed in the five years. The main takeaway of this year’s report was that streaming services will continue to grow, albeit slower than before, while cable television will continue its gradual decline.
“The subscription video-on-demand (SVOD) boom triggered by Netflix, which sparked streaming wars on a global and national scale, has dominated the over-the-top (OTT) market over the past decade but sputtered in 2022,” PwC’s report said. “As record subscriber uptake during the COVID-19 pandemic slowed dramatically – or, in the case of Netflix, declined for two quarters – a new commercial reality has set.
“Some OTT players have been forced to reassess the growth-at-any-cost mentality strategy, which created an unsustainable global content arms race. With that said, there’s clearly more room for growth overall – it’s just that this growth will be less concentrated in the hands of one or two major players,” the report continued.
The industry’s global revenue is projected to grow from $116.5 billion in 2022 to $133.0 billion in 2023, rising to $174.6 billion by 2027.
With the streaming industry’s growth-at-all-cost mentality losing its viability, companies have shifted their focus to earning more profit. PwC’s report identified the ad-supported market as the next big thing. Ad-tiers for subscriptions are still largely unused by major streaming services, but PwC predicts it will become standard in the upcoming years.
Ad-supported services allow for growth within an already saturated market. Streaming revenue within the U.S. is predicted to grow from $49.4 billion last year to $75.5 billion in 2027 led largely by the introduction of ad-supported tiers to major streaming services.
Streaming services will also draw new customers in by using similar methods to traditional television. Along with being more reserved with the content they fund, streaming services are expected to parallel cable TV by offering bundled services.
YouTube TV, for example, acquired NFL Sunday Ticket last year, and now offers the product as an add-on to their existing service. Deals like this are expected to become more common as streaming services attempt to separate themselves from their competitors.
Meanwhile, cable TV continues its slow decline. Last year, cable TV hit a “milestone” “when the number of pay-TV households fell below half the total number of U.S. homes for the first time.” These numbers are expected to continue to drop as cable TV is expected to reach only 49.9 million homes by 2027, halving the 100 million homes reached as recently as 2016.
Ironically, as streaming services shift towards traditional practices to acquire users, cable TV is looking to experimental practices to keep itself relevant.
“The industry is focusing on attracting viewers across a variety of platforms at different price points to maximize subscription revenue and attract advertisers with new monetization formats,” PwC’s report notes. “But with the rate of the exodus from pay-TV hitting an all-time high in some markets, a renewed focus on experimenting with new business models has become imperative.”
Movieguide® previously reported on the future of the entertainment industry:
After years of uncontrolled growth, Netflix was hit with reality last year when they posted a loss in subscribers during Q1, the first time they had seen a drop in users in over a decade. Since then, the company has been restructuring itself to focus on maximizing profits, rather than subscribers.
The most notable change in the company came when Netflix announced they would be cracking down on password sharing in March of last year. This change came with the introduction of an ad-supported subscription tier, in an effort to provide a cheaper option for users who had previously been using someone else’s account. This crackdown has been tested by Netflix in multiple markets and is planned to be fully rolled out by June of this year.
The company, however, does not expect that the crackdown on password sharing will do much to increase its subscriber count; Netflix understands that it has all but saturated its subscriber numbers from its current markets, mainly the U.S. Thus, the company plans to broaden its original content, creating shows and movies for primarily international audiences to continue to boost its subscriber count.
Netflix also hopes to entice viewers by offering access to live events. The streaming site’s first experiments with this failed. A LOVE IS BLIND livestream didn’t open when clicked and a live-streamed Chris Rock Comedy Special crashed after millions of viewers joined, however, the company views this as an important category to invest in to continue to stand out from other streaming sites.
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