U.S. viewers will spend more on streaming video than pay TV for the first time in 2024, according to new research from Strategy Analytics.
The company is releasing its latest U.S. Subscription TV Forecast, which projects that consumer spending on traditional pay TV services fell by 8% to $90.7 billion in 2020. It expects that number to decline further to $74.5 billion in 2023. At the same time, spending on subscription streaming services (including VOD and virtual MVPDs) rose by 34% to $39.5 billion in 2020 and will reach $76.3 billion in 2024, surpassing traditional pay TV.
By 2026, Strategy Analytics predicts that pay TV will account for only 40% of spending on video and TV services, compared to 81% in 2016.
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“The revenue picture gives the best illustration of the relative strength of new and old businesses,” said Michael Goodman, director of TV and media strategies, in a statement. “The fact that viewers are willing to divert an ever-increasing share of their entertainment wallet away from pay TV and towards new internet-based services demonstrates that the future lies with streaming video services rather than legacy pay TV players. This is a long-term transition, but there is no doubt that the writing is on the wall for pay TV as we have known it for more than 40 years.”
The balance shift in revenues correlates with anticipated accelerations in cord cutting. According to recent projections from S&P Global, the overall rate of subscriber decline for U.S. pay TV operators will hit 4.5% in 2021 and 6% in 2022. The company is predicting growth among vMVPDs will slow as the total legacy pay TV market (including cable, satellite and telco) swells to a 10.3% annual rate of subscriber declines in 2022.