Global advertising revenue from streaming services will nearly double over the next five years as Hollywood continues to expand its international footprint amid the escalating streaming wars.
According to media-buying giant GroupM, advertising revenue from streaming, which hit $16.5 billion in 2021, will nearly double by 2026 to $32.5 billion. The findings were part of GroupM’s annual End-of-Year Forecast, which you can read here.
At the same time, GroupM (which is the media-buying wing of the global ad agency WPP), predicts that advertising revenue on traditional TV will not bounce back to pre-pandemic levels until 2023. Compared to streaming advertising’s expected growth, traditional television ad revenue is forecast to increase less than 5% from $145 billion to $152 billion over the next five years.
International footprint has become more and more important as the streaming era not only has shattered the foreign-language barrier — as Netflix’s Korean-language megahit “Squid Game” proved — but it’s given Hollywood entertainment giants a turnkey global distribution mechanism. Netflix is already in more than 200 million homes and Disney+ in more than 100 million, with India being the main driver of the latter’s 2021 subscriber growth.
HBO Max, which launched in Latin America and Europe this year, is planning to roll out to 14 more territories next year. Paramount+ partnered with rival Comcast-owned Sky to take the service to European markets.
Streaming ad dollars look to become more important as U.S.-based streaming services continue their global expansion and invest more capital into international productions.
“Because of all the investment they’re making in streaming services today in the U.S., they’re establishing their presences in markets around the world and, whereas 10 years ago whatever presence a film studio had in a non-American market, they weren’t necessarily selling advertising directly to consumers for the most part. I think that’s going to change. They’re establishing consumer presence with their subscription services in those markets, rather than licensing content to the local incumbent broadcasters,” Brian Weiser, global president, business intelligence for GroupM, said during a media conference.
However, the largest streaming services, like Netflix, Amazon Prime Video and Disney+, currently do not feature advertising. Not only is that going to dampen streaming ad growth, but Weiser argued that it’s going to hammer traditional TV as well with international TV networks losing out on Hollywood-produced content that is now going to their own streaming services.
“We think that the ad-free services will basically dominate increasingly every market on Earth outside of maybe China; advertising on television will become a lot harder to come by. The reach potential of television will diminish over time,” Weiser said.