PwC: Packaged-Media Revenue to Decline 55% Through 2026

Consumer migration from packaged media movies to digital distribution continues, with new data from consulting firm PricewaterhouseCoopers (PwC) projecting that the U.S. home entertainment retail market will generate about $1.1 billion in revenue from the sales of DVD, Blu-ray Disc and 4K UHD Blu-ray  titles in 2026 — down almost 55% (or 17.5% annually) from revenue of $2.5 billion in 2022.

Sales of digital movies and TV shows should increase half of 1% annually to $6.3 billion in 2026, from $5.6 billion this year. That includes $576 million from pay-TV operators and $5.7 billion from digital platforms, including Vudu, iTunes, Microsoft Movies and Redbox Digital, among others.

Digital rentals will remain flat at $1.7 billion, with $621 million originating from pay-TV operators and more than $1 billion from digital platforms.

Meanwhile, the U.S. subscription streaming video market will continue to flourish, as revenue grows exponentially. PwC contends the SVOD market will grow 8.5% annually to $33.6 billion in 2026, up from $25.3 billion in 2022.

Pay-TV Fighting Back with OTT Video

NEWS ANALYSIS — Consulting firm PricewaterhouseCoopers just issued a report contending over-the-top video revenue, spearheaded by subscription VOD stalwarts Netflix, Amazon Prime Video and Hulu, is projected to top $30 billion by 2022.

Indeed, SVOD revenue represented nearly 80% of OTT video revenue in 2017 — a percentage that is expected to inch past 81% by 2022 fueled by original programming.

So, what is the pay-TV ecosystem — which lost about 3 million subscribers in 2017 — doing in response? Jumping on the OTT video bandwagon.

Rollout of standalone online TV platforms such as Dish Network’s Sling TV, Charter’s Spectrum TV Plus and AT&T’s DirecTV Now will contribute to the global pay-TV market, including satellite, cable, and IPTV services, generating $295 billion in revenue by 2022, according to ABI Research.

“OTT is becoming a preferred video viewing platform due to its low-cost and availability on multiple devices without a long-term contract requirement,” Khin Sandi Lynn, industry analyst at ABI Research, said in a statement.

Pay-TV operators — notably Comcast Cable with its X1 set-top — are embracing broadband to provide OTT service together with traditional TV.

Swedish cable operator Com Hem recently launched Android-based TV Hub, which allows subscribers to access linear TV channels and streaming services. Broadband-based set-top boxes are a good option for pay-TV operators to compete with OTT service providers while maintaining customer loyalty, according to ABI.

“Pay-TV and OTT offerings can vary dramatically between regions and between countries in terms of content availability and price,” said Lynn. “OTT adoption in mature markets will impact pay-TV adoption there, but the more reliable delivery and all-in-one nature of pay-TV will prove valuable in those developing markets.”