Report: 2021 SVOD Revenue to Grow 35% to $40 Billion

The direct-to-consumer universe is exploding. New data from Convergence Research found that of more than 80 over-the-top video services, led by Netflix, Hulu, Amazon Prime Video and HBO Max, estimated 2020 access revenue grew 35% to $29.6 billion. The total is forecast to grow 35% to $39.9 billion in 2021, and $59.4 billion in 2023 — double the amount in 2020.

“We forecast average OTT subscriptions will increase to five per broadband household in 2023 from three in 2020,” read the report.

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The report estimates cable, satellite TV and telecom pay-TV revenue declined 6% last year to $94.7 billion. The study forecasts a decline of 6.5% to $88.5 billion this year, and a decline of 10% in 2023 to $73.4 billion. At current run-rate SVOD access revenue will exceed pay-TV access revenue in 2024.

“We estimate 2020 saw a decline of 6.49 million domestic TV subscribers, 2019 a decline of 6.36 million, and we forecast a decline of 7.35 million pay-TV subs in 2021, and 7.76 million in 2023,” read the report. “Hence, U.S. pay-TV subs declined 8% in 2020, up from 7% in 2019, and will decline 10% in 2021 and 13% in 2023.”

Convergence Research found 42% of U.S. households did not have a pay-TV subscription in 2020, a trend that is expected to rise to 48% in 2021 and 60% in 2023. By the end of 2022, more than half of domestic households will no longer have a traditional linear TV subscription.
At the same time, more than 5 million residential broadband subscribers were added in 2020 (the largest annual broadband subscriber additions in over a decade) and revenue grew 8% to $72 billion. The report forecasts another strong year for broadband in 2021, and that in 2022, residential broadband access revenue will exceed 2022 TV access revenue — driven by cable.

“Pressure on programmers and pay-TV access providers to keep up spending in order not to lose programming primacy shows no signs of abating,” read the report. “Major programmers face a complicated trajectory, not only in terms of competition but balancing their linear & OTT programming, advertising, theatrical distribution, as well as direct-to-consumer businesses.”

While in decline, the traditional pay-TV business with advertising remains a $220 billion business.

“While Discovery+, Disney+/Hulu, HBO, Paramount+, Peacock’s  content ecosystems are attractive SVOD platforms and make programmers competitive with Netflix & Amazon Prime Video, consumers only have so much time and wallet (the top dozen OTT services, not including online TV, cost the equivalent of an average TV subscription),” read the report.