Revenue from streaming services is set to surpass that of traditional pay television products like cable and satellite in the United States for the first time this year, according to new research from Ampere Analysis.
The study released on Monday said streaming subscribers surpassed that of pay television several years ago — 2016, to be precise, according to Ampere — but revenue from streaming services have been slower to overtake that of traditional pay television.
That all changes this year, fueled by hybrid advertising-subscription streaming services and free, ad-supported streaming platforms, Ampere affirmed.
“Most major streaming services in the U.S. have launched their hybrid advertising tiers, which, along with increasing clamp-downs on password sharing, have been successful at reigniting growth in the streaming market,” Rory Gooderick, a senior analyst at Ampere Analysis, said in a statement.
Gooderick said there was still a way forward for pay television, noting last year’s unique carriage arrangement between the Walt Disney Company and Charter’s Spectrum TV, which allows Spectrum TV subscribers to access Disney-owned streaming services as part of certain cable television packages.
The pact “shows how the two businesses can work together to maximize streaming’s reach to domestic subscribers, and highlights the importance of traditional distribution platforms as service aggregators,” Gooderick proffered.
“Longer term contracts and the reduction in churn makes this an attractive proposition for streamers, while control over the billing relationship also means there’s something in it for the pay-TV provider too,” he said.
Those arrangements have proven to be wildly popular in Europe, with streaming services — particularly those franchised from stateside products like Paramount Plus, Max and Discovery Plus — typically marketed to cable, satellite and Internet TV customers as part of their packages.
Back in the United States, Ampere said cheaper ad-supported tiers are helping to fuel revenue growth among some subscription-based streaming services. In the domestic market, revenue from ad-supported tiers is expected to cross $9 billion this year, Ampere said, with Amazon’s decision to incorporate ads in the base tier of Prime Video seen as a major catalyst for pushing that revenue forward.
While streaming services are overtaking pay television services in subscribers and revenue, there is still one key metric where cable and satellite has an advantage: Average revenue per user, or ARPU, is still higher on traditional pay television platforms compared to those available on connected devices, Ampere noted.
