Report: OTT Revenue to Grow to $44.2 Billion in 2022

Convergence Research estimates U.S. OTT access revenue grew 35% to $22 billion in 2019 and forecasts 29% growth to $28.5 billion for 2020 and $44.2 billion for 2022.

That’s based on 77 OTT services (more than 50 providers) led by Netflix, Hulu and Amazon analyzed in its 2020 Couch Potato Reports. The forecast assumes the coronavirus will not be as major a disruptive force beyond 2020.

Given the accelerating decline in TV subscribers, revenue, and the ongoing programming cost and TV access price increases, TV advertising revenue has also started to decline, according to Convergence. The firm estimates 2019 U.S. cable, satellite, telco TV access revenue declined 3% to $100.4 billion and forecasts a decline of 6% to $94.8 billion in 2020 and higher percentage declines in 2021 and 2022.

Convergence estimates 2019 saw a decline of 6.36 million U.S. TV subscribers, 2018 a decline of 4.03 million, and forecasts a decline of 7.1 million TV subs in 2020. U.S. TV subscribers declined by more than 7% in 2019 and more than 4% in 2018, according to Convergence, which forecasts a 9% decline in 2020 and higher percentage declines in 2021 and 2022.

As of the end of 2019, the firm estimates more than 36% of U.S. households did not have a TV subscription with a cable, satellite or telco TV access provider, up from 31% at the end of 2018. Convergence forecasts 42% at the end of 2020 and 54% at the end of 2022.

The firm estimates 2019 saw more than 7.2 million U.S. cord-cutter/never household additions.

From the end of 2019 to the end of 2025, Convergence sees a decline of more than 50% of U.S. TV subscribers, more than 40% of annual TV access revenue, while cord-cutter/never households and OTT access revenue more than double, with OTT access revenue surpassing 2025 TV access revenue.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The firm estimates 2.74 million U.S. residential broadband subscribers were added in 2019 and revenue grew 8% to $66.7 billion. It forecasts additions will moderate in 2020 and that 2022 residential broadband access revenue will almost be on par with 2022 TV access revenue. Residential broadband subs surpassed TV subs in 2017.

Follow us on Instagram

Cable continues to add the lion’s share of residential broadband subs (telco has lost residential broadband subs every year since 2015). AT&T, CenturyLink and Frontier were responsible for the majority of 2019 telco broadband losses, and Convergence forecasts they will contribute the majority of losses in 2020 as well.

“With programmers having jumped in with both feet, and Apple, DAZN, and Quibi joining Netflix and Amazon’s spending parade, the OTT arms race has truly begun,” reads the report. “We believe Netflix no longer has the same flexibility to raise pricing as frequently as it has in the past. Alternatively, Amazon and Apple have the luxury of expensing OTT programming as an additional operating cost to their core businesses. Amazon has clearly demonstrated its programming commitment to OTT. It remains to be seen if Apple is willing to endure the long-term spending campaign required to become a key OTT player.”

“The Battle for the American Couch Potato: OTT and TV” and “The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless” samples, summary and contents can be found here.

Leave a Reply

Your email address will not be published. Required fields are marked *

20 − 8 =

This site uses Akismet to reduce spam. Learn how your comment data is processed.