OTT services may have a lock on subscribers when comparing numbers to their traditional Pay-TV rivals — Netflix alone has more subscribers than the largest cable companies in the US — but when it comes to revenue streamers are far behind.
New data from Convergence Research estimates that US OTT access revenue (based on 55 OTT providers led by Netflix) grew 41% to $11.9 billion in 2017, forecasted to reach $16.6 billion for 2018, and is expected to hit $27.6 billion for 2020. But despite these growing numbers, revenue generated from OTT is still billions of dollars away from its traditional TV, cable, and satellite counter parts.
In 2017 US Cable, Satellite, Telco TV access (not including OTT) revenue grew 1% to $107.6 billion ($94.30/mo. ARPU), and forecast $107.4 billion (97.90/mo. ARPU) for 2018, and is expected to hit $106.9 billion for 2020. But even with these companies revenue on the decline there is till a $79 billion spread between them and OTT services.
Despite the lead in revenue, traditional pay-TV companies are loosing subscribers at a consistent rate.
Convergence Research estimate 2017 saw a decline of 3.66 million US TV subscribers, 2016 a decline of 2.2 million, and they forecast a decline of 3.72 million TV subs for 2018; in other words, the US TV subscriber base is declining in the 4%/annum range.
“The gloves are off. The TV-Movie Industry is being reconstructed from the inside and by the outside, as programmers now directly compete against their traditional TV access and independent OTT buyers that rival in terms of content spend. Amazon, Apple, DAZN, Facebook, Google and Netflix all have the money muscle to finance their own productions or outbid on programming including major sporting franchises,” The research firm noted in its report. “We expect especially for the US market going forward fewer content deals between programmers and independent OTT providers: 2017 saw Disney choose not to renew with Netflix and embrace OTT, HBO not renew with Amazon in the US, Hulu (which is spending more on content on a per US subscriber basis than Amazon or Netflix) continue to bolster its offerings compete & more directly against TV access providers, and A+E, AMC, Discovery, Scripps, and Viacom back & supply Philo.”
- OTT subscriber households will far surpass TV subscribers in 2020, however U.S. TV subscriber average revenue per user (ARPU) will be four times U.S. OTT subscriber household ARPU, down from six times in 2017.
- 2017 saw a decline of 3.66 million U.S. TV subscribers and they forecast a decline of 3.72 million TV subscribers for 2018
- Broadcast & Cable Network Online TV advertising represented 5.2 percent of 2017 U.S. TV advertising revenue and forecast 5.6 percent for 2018