Streaming TV services will nab 25% of video market by 2022, analyst says

DirecTV Now
DirecTV Now should continue to see solid subscriber growth of about 320,000 during the third quarter. (AT&T)

Sling TV, DirecTV Now and other streaming TV services will continue their current growth trend over the next few years and expand their share of the pay TV market.

That’s according to UBS analyst John Hodulik, who said that despite recent price increases, virtual MVPDs will account for about 25% of the video market by 2022.

“Pricing remains at a wide discount to traditional TV, while offerings continue to improve with fewer programming gaps, additional features and improved transmission quality,” Hodulik wrote in a research note.

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UBS forecasts 9.2 million streaming TV subscribers by the end of 2018, and 24 million by the end of 2022.

In the shorter term, UBS is predicting vMVPDs will add 850,000 subscribers during the third quarter, down slightly from the 890,000 they added in the second quarter. The firm predicts streaming TV subscribers will total 8.2 million in the third quarter.

Among the leaders, DirecTV Now should continue to see solid subscriber growth of about 320,000 despite some pressure from a recent price increase, Hodulik said.

RELATED: Hulu Live TV nears 1M subscribers as U.S. vMVPDs grew by 868,000 subscribers in Q2, analyst says

UBS is basing that on some app download tracking through September 2018 it did with UBS Evidence Lab. According to the firm’s data, YouTube TV is still the most downloaded streaming app but DirecTV Now is catching up.

UBS’s growth prediction for DirecTV Now coincides with what Strategy Analytics estimated back in August. For now, Sling TV is the top U.S. vMVPD with about 2.3 million subscribers, but DirecTV Now is coming up quick on Dish Network’s streaming TV service.

“While the entire vMVPD segment is growing, AT&T’s DirecTV Now deserves special notice given how rapidly it has grown in a fairly short period of time,” said Michael Goodman, director of television and media strategies, in a statement. “If it continues on its current growth trajectory it will overtake Sling TV as the largest vMVPD in early 2019.”

AT&T’s WatchTV is also catching on with about 9% share of streaming TV app downloads.

AT&T announced WatchTV as a free service for many AT&T wireless subscribers and as a smaller, standalone channel bundle for other consumers.

“WatchTV is available for free to new AT&T Unlimited & More subs, so uptake on a standalone basis (available for $15/mo) remains to be seen,” Hodulik wrote.