Research: U.S. OTT Access Revenue Grew 37% to $39.4B in 2021

Convergence Research estimates U.S. OTT access revenue grew 37% to $39.4 billion in 2021 and forecasts $51 billion for 2022 and $69 billion for 2024.

That’s based on more than 75 OTT services (more than 50 providers) — led by Netflix, Disney/Hulu, Amazon and Warner Bros. Discovery — analyzed in its 2022 Couch Potato Reports.

The firm forecasts 2022-24 annual U.S. OTT household penetration, subscriptions per household, and net OTT subscriptions added will each progressively see more moderate growth. Convergence forecasts 80 million additional U.S. subscriptions in 2022 and 50 million in 2024.

Convergence estimates 2021 U.S. cable, satellite, telco TV access revenue declined 4% to $91 billion and forecasts a decline of 6% to $85.5 billion in 2022 (hence ARPU should grow 3.5%), with higher revenue declines in 2023 and 2024. The firm estimates 2021 saw a decline of 6.5 million U.S. TV subscribers, 2020 a decline of 6.5 million, and forecasts a decline of 7 million TV subs in 2022 and 7.2 million in 2024. In its U.S. Cord Cutter/Never Household Model, as of year-end 2021, Convergence estimates 47% of U.S. households did not have a TV subscription with a cable, satellite, or telco TV access provider, up from 42% at the end of 2020. The firm projects that figure will rise to 53% by the end of 2022 and 64% by the end of 2024. 

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Convergence estimates 3.715 million U.S. residential broadband subscribers were added in 2021 (down from 5.1 million in 2020) and revenue grew 10% to $79.6 billion, and forecasts 4.3 million residential broadband subscriber additions in 2022 and 7% revenue growth to $85.5 billion. While cable dominates residential broadband and continues to add the largest share of residential broadband subs, telco and fixed-wireless sub additions continue to improve, according to the firm.

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.

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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.

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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.

Research: OTT Revenue Forecast to Reach $22 Billion in 2019

Based on 66 OTT providers, led by Netflix, Hulu and Amazon, U.S. OTT access revenue grew 37% to $16.3 billion in 2018 and is forecast to reach $22 billion in 2019, according to a new research from Convergence Research.

The research firm has released two new reports, “The Battle for the American Couch Potato: OTT and TV” and “The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless.”

Still, U.S. TV subscriber average revenue per user (ARPU) is still forecast to be three times U.S. OTT subscriber household ARPU in 2021.

The firm estimates 2018 U.S. cable, satellite, telco TV access (not including OTT) revenue declined 3% to $103.4 billion in 2018 and forecasts 2019 will see a similar decline. Also, 2018 saw a decline of 4.01 million U.S. TV subscribers and 2017 a decline of 3.66 million, according to the firm, which forecasts a decline of 4.56 million TV subs for 2019. The U.S. TV subscriber
base will decline 5% in 2019, from a decline of 4% in 2018, according to the firm’s estimates.

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By the end of 2018, the firm estimates 30% of households did not have a traditional TV subscription with a cable, satellite, or telco TV access provider, up from 26% at the end of 2017. The firm forecasts that number to reach 34% of households by the end of 2019. Convergence Research estimates 2018 saw almost 5 million cord cutter/never household additions.

The firm projects that a number of OTT plays, including large and niche, will fail due to insufficient subscriber traction, cost and competition, noting major programmers continue to accelerate their direct-to-consumer drive, including Disney and WarnerMedia. Other developments noted by the firm include:

  • Hulu spends more on content per sub than either Amazon or Netflix and continues to discount (notably with Spotify);
  • CBS/Showtime’s OTT subscriber trajectory has been faster than expected;
  • Discovery has backed and supplied Philo, gone live with Hulu, Sling and YouTube TV, and will be launching an OTT service with the BBC;
  • NBC Universal will be launching an OTT service in 2020;
  • and Viacom has backed and supplied Philo and others, acquired Pluto and Awesomeness TV and is producing for Amazon and Netflix.