The U.S. market that includes streaming services is expected to slow down over the next five years, according to PwC’s annual Global Entertainment & Media Outlook.
In 2021, the market for over-the-top video services, which refers to internet-based streaming providers such as Netflix, Disney+ and HBO Max, as well as platforms that allow users to buy or rent content, grew 19.9 percent from the previous year, according to the report released Monday. That’s after a massive growth spurt in 2020, when the market jumped 35.6 percent from the previous year.
That growth rate is expected to drop to an average of 6.8 percent over the next five years, as consumers become choosier about streaming subscriptions, and as inflation and concerns about the economy play into personal spending habits.
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“The dollars are, in some ways, starting to move around,” says CJ Bangah, who authored the report. “And there are only so many hours in a day, and there are only so many subscriptions that consumers are going to have.”
This comes as competition, and spending, among streaming providers has been heating up. Disney is expected to spend $33 billion on content in 2022 and Netflix is spending around $17 billion. Streaming companies must be more intentional about those investments moving forward — a trend that’s already begun at Netflix and been promised at HBO Max — says Bangah, as each will need to deliver “outsized value” to consumers, while watching their bottom line, to remain in the game.
To combat consumer frustration about the number of subscription services, the space will likely see a greater number of mergers or partnerships between existing streamers, as well as more companies adapting an Amazon-esque model, in which one platform expands to provide music, podcasts and more and is able to better individualize the media consumption experience based on the user.
The U.S. is still the largest OTT market in the world, bringing in $29 billion in 2021, expanding its lead over China, the next largest market. The total dollar amount in the U.S. is expected to grow to $40.4 billion by the end of 2026, with the streaming video on demand segment growing to $33.6 billion that year. Meanwhile, the market for TVOD, or transactional video on demand, is expected to contract, as movie studios return to more standard theatrical windows.
Additional subscriber growth is expected to come from users in their late teens, who are now focused on short-form videos on platforms such as TikTok, but are predicted to move into longer-form content. Platforms can also look into greater worldwide expansion, as more countries gain broader internet access.
This story appeared in the June 22 issue of The Hollywood Reporter magazine. Click here to subscribe.
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