Investor RelationsProduct Login
What is the U.S. video subscription market? And how have traditional TV viewing habits been impacted by the rise of streaming platforms such as Netflix, Hulu, and Disney? Get answers to these questions and learn more about the evolution of the U.S. video subscription business in our industry primer below.
Paying for TV programming was a novel concept in 1969 when analyst Paul Kagan wrote his first newsletter about the future of HBO in Los Angeles, the country’s first cable TV market.
At the time, American TV was free to view and ad-supported. Naysayers doubted anybody would pay for something that was already free. But now, most occupied U.S. households pay monthly for a video service. Decades of industry studies under Kagan formed the foundation for the telecommunications and media research provided by S&P Global Market Intelligence.
The subscription video market in the U.S. generated $121 billion in 2021, with 75% coming from traditional multichannel cable packages and 25% from streaming services.
However, that mix is rapidly shifting, with more households cutting the cable cord and more media owners incorporating streaming models. By 2025, streaming services are projected to control about 40% of total U.S. subscription video revenues.
Comcast and Charter ranked as the sixth- and seventh-largest video subscription businesses in the U.S. as of the first quarter of 2022, as Netflix, Disney+, Warner Bros. Discovery+, and other subscription-based video-on-demand (VOD) services have sprinted past them.
In the early 2000s, the honeymoon with cable network packages began to wane. Consumers complained about paying for 200 channels when they only watched five.
But it was not until the 2007 launch of Netflix streaming that the streaming subscription video model became a reality. Hundreds of streaming subscription services are now available to U.S. consumers. As of June 2022, an estimated 70% of U.S. households either pay for Netflix or share a password to access the service.
The primary delivery medium for the streaming boom has also blossomed, with U.S. broadband homes growing from 61.2 million in 2007 to over 122 million in 2022. 5G rollouts are paving another path to streaming. A rejuvenated, fixed wireless market doubled its subscriber base in 12 months to top more than 4 million U.S. subscribers in the summer of 2022.
From the launch of Netflix streaming in 2007 through the end of 2022, we estimate 32.9 million U.S. homes will have cut the traditional multichannel video cord (cable, telco, and satellite), taking the industry from 92.7 million to 59.8 million.
The pace of cord cutting has picked up post shelter-in-place. Cable operators lost a record number of video subs in the first quarter of 2022.
We expect cord-cutting to continue. Our forecast assumes homes using online video only (e.g., using Netflix, Disney+, and other video-on-demand streaming services) could overtake traditional multichannel in the next few years.
Virtual multichannel live streaming services such as Alphabet Inc.’s YouTube TV, Hulu + Live TV, fuboTV Inc. , and Philo, offering appointment-based and video-on-demand programming, are also forecast to grow over the next few years.
With better streaming content and more digital sports, even higher-income viewers are using the scissors.
Popular video assets have recently launched streaming apps, including Walt Disney Co.’s Disney+ (2019), Comcast Corp.’s Peacock (2020), and Warner Bros. Discovery Inc.’s Discovery+ (2021).
This may help explain why traditional multichannel cord-cutters surveyed increasingly indicate that streaming and/or a combination of streaming and over-the-air, or OTA, suffice to satisfy their entertainment needs.
For instance, while 36% of cord-cutters said streaming and/or OTA were good enough substitutes to cut the cord in 2017, in 2022, that figure grew to 42% of cord-cutting respondents.
Despite cost being the primary cord-cutting driver, higher-income homes are increasingly cutting the cord. For instance, while only 17% of homes earning $100,000 and above annually cut the cord in 2017, in 2022, the figure grew to 24%.
In addition, our spring 2022 survey found younger audiences to be cutting the cord more than usual.
More high-quality streaming options and digital sports are only adding fuel to the cord-cutting fire, contributing to our expectations for the trend to continue over the next several years.
With the subscription video market in flux, viewers are comfortable finding their favorite show wherever it resides. Increasingly, that content, even sports, is being served by the combination of streaming technology and a broadband pipe, not by traditional cable or rabbit ears.
Live sports events attract large audiences. Super Bowls have generated record audiences for years. Yet while live sports are often touted as the savior for traditional multichannel bundles, the whole story is complex and changing as quickly as the business model.
Cable networks (including ESPN, Warner Bros. Discovery Inc.’s TBS and TNT, Fox Corp.’s FOX Sports 1, and Comcast Corp.’s Golf Channel) have rights to all the major sports leagues.
But sports rights are going digital from regional sports networks (RSN) to large streaming-only companies, even for America’s coveted football and baseball games.
* Apple Inc.’s Apple TV+ acquired exclusive rights to “Friday Night Baseball” MLB games for the 2022 season for about $55 million per year.
* Apple also acquired ten years of MLS digital rights for about $250 million per season in June 2022 (soccer is particularly popular with Apple TV+ subs).
* The New England Sports Network, on June 1, 2022, became the first RSN to launch a direct-to-consumer streaming app, priced at $29.99 per month or $329.99 per year.
* Sinclair Broadcast Group Inc.’s Bally’s, which owns 21 RSNs, launched its streaming app across various streaming devices on June 23, 2022, for $19.99 per month or $189.99 per year.
* Warner Bros. Discovery Inc.’s HBO Max inked a deal to cover U.S. Men’s and Women’s Soccer team nationals starting in 2023.
* Some NBA games could be coming to HBO Max as well.
According to our annual Consumer Insights surveys of about 2,500 online U.S. adults from 2018 through 2022, on average, 39% of survey takers watch a game in real-time weekly.
But viewers have more options than ever to watch live games outside the traditional bundle. Contracts are coming up for the NBA (2024), NHL (2027), and MLB (2028), and streaming will probably play a leading role in the renewals.
Copyright © 2022 S&P Global Market Intelligence, a division of S&P Global Inc. All rights reserved.