A new report from PwC sees revenue from traditional TV continuing to erode as more viewing moves to over-the-top platforms.
Traditional TV revenue in the U.S. is seen as dropping 2% to $135.3 billion on a compounded annual rate from 2022 to 2027, according to PwC’s Global Entertainment & Media Outlook from 2023 to 2027.
Meanwhile, over-the-top video revenues are seen increasing 15.9%, compounded to $75.5 billion in 2027. Advertising is forecast to grow at 25% annually to $33.4 billion, nearly catching subscription revenue, which is seen growing at 14.2% annually to $35.8 billion.
But the growth rate is slowing, with OTT video revenue up just 4.3% in 2027, compared with the 35.3% growth seen in 2020 at the height of the pandemic.
“While most of the focus has been on the SVOD sector of the OTT market, the biggest tectonic move continues to be the rise of ad-supported streaming,” PwC observes.
“The slowdown in the SVOD space, coupled with budget-conscious consumers seeking cheaper entertainment services as household budgets were hit by inflation and the cost-of-living crunch, has led to a flurry of activity in the AVOD space,” the report said. “The commercial opportunity in tapping, or diversifying, with AVOD offerings is clear. In 2027 the SVOD market will have grown in total by $9.2 billion compared with 2022 levels, while the AVOD market in the US will have ballooned by $16.3 billion.”
PwC sees traditional TV revenues falling to $141.8 billion in 2024 from $143.6 in 2023, which is down from $148.3 million in 2022.
With cord-cutting, subscription revenue is expected to fall at a 5% clip, dropping to $61.1 billion by 2077. That’s down from a peach of $100 billion in 2017.
“Pay TV companies continue to limit the decline in traditional subscription revenue through a combination of price rises sweetened with value adds, like higher-definition TV and bundles including streaming services,“ the report said. “But younger consumers who are not wedded to traditional viewing conventions are continuing to cancel subscriptions, with older households likely to prove the core user base of the future.”
Advertising revenues will edge up almost 0.6% on a compounded basis, hitting $74.1 billion in 2027. While broadcast, cable and local advertisers are all seen eroding, online advertising in traditional TV is seen growing at a 10% rate through 2027.
