The U.S. market that includes streaming services is expected to slow over the next five years, according to PwC’s annual Global Entertainment & Media Outlook report.
In 2021, the over-the-top video services market, which refers to internet streaming providers such as Netflix, Disney+ and HBO Max, as well as platforms allowing users to buy or rent content, increased by 19.9% compared to the previous one. year, according to the report released on Monday. This is after a massive growth spurt in 2020, when the market jumped 35.6% from a year earlier.
This growth rate is expected to drop to an average of 6.8% over the next five years as consumers become more demanding of streaming subscriptions, and inflation and concerns about the economy play out. on personal spending habits.
“The dollars are, in some ways, starting to flow,” says CJ Bangah, author of the report. “And there are only a limited number of hours in a day, and there are only a limited number of subscriptions that consumers will have.”
It comes as competition and spending between streaming providers has intensified. Disney is expected to spend $33 billion on content in 2022 and Netflix is spending around $17 billion. Streaming companies need to be more intentional about the future of these investments — a trend that’s already started at Netflix and promised at HBO Max — says Bangah, because each will have to deliver “outsized value” to consumers, while monitoring their results, to stay in the game.
To combat consumer frustration with the number of subscription services, the space is likely to see more mergers or partnerships between existing streamers, as well as more companies adapting an Amazon-esque model, in which a platform is expanding to deliver music, podcasts and more and is able to better individualize the media consumption experience based on the user.
The United States is still the largest OTT market in the world, bringing in $29 billion in 2021, cementing its lead over China, the second-largest market. Total US dollars are expected to reach $40.4 billion by the end of 2026, with the streaming video-on-demand segment reaching $33.6 billion that year. Meanwhile, the market for TVOD, or transactional video on demand, is expected to contract as film studios return to more standard cinema windows.
Further growth in subscribers is expected to come from users in their late teens, who are now focusing on short videos on platforms such as TikTok, but are expected to transition to longer content. The platforms may also be eyeing greater global expansion as more countries gain wider internet access.
This story appeared in the June 22 issue of The Hollywood Reporter magazine. Click here to subscribe.