OTT subscription revenue to hit $69B in 2024, survey notes

The recent studies by Convergence Research Group underscore an evolution in the U.S. entertainment and media landscape, specifically within the over-the-top (OTT) content and streaming sector.

According to the research, U.S. OTT subscription revenue is projected to escalate by 17% to $69 billion in 2024.

This growth is part of a broader trend of households shifting away from traditional pay TV subscriptions, with 60% of U.S. homes not having a pay TV subscription at the end of 2023. The studies anticipate this figure to increase to 75% of all U.S. households by the end of 2026.

The findings are encapsulated in two comprehensive reports, “The Battle for the American Couch Potato: OTT and TV” and “The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless.”

These reports, based on an analysis of over 90 OTT services involving more than 50 providers, including industry leaders such as Netflix, Disney/Hulu, Amazon Prime and WBD, suggest a sustained period of double-digit growth rates for the OTT sector through at least 2026.

Despite this robust growth, the reports forecast a moderation in the rate at which new paid U.S. OTT subscriptions are added from 2024 to 2026, projecting a 40% reduction compared to the rate from 2021 to 2023. Even with a more optimistic outlook for 2024, the growth in total U.S. paid OTT subscriptions is expected to taper to single digits, down from the double-digit growth experienced before 2023. This adjustment is anticipated despite the total reaching an estimated 497 million subscriptions at the end of 2023.

An interesting aspect of the studies is the detailed examination of changes in OTT subscription offerings, particularly the increasing role of advertising-supported options. These ad-supported offers represent a considerable cost saving, averaging 45% less than their ad-free counterparts, an appealing option for cost-conscious consumers. Moreover, the reports highlight the trend of average U.S. price increases for OTT services, pegging it at 11% for both 2022 and 2023, with similar increases expected in 2024.

Parallel to the rise of OTT, the studies document a decline in U.S. cable, satellite and telco TV subscriptions, with a 12% drop in 2023 and predict further declines in the coming years. This shift is also reflected in the revenue trends for traditional TV access, which saw a 10% decrease in 2023, with expectations of continued declines.

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However, the reports note a contrasting trend in residential broadband subscriptions, which saw an increase in 2023, driven in part by significant contributions from T-Mobile and Verizon. This reflects the nuanced dynamics within the telecommunications and media industries, where the decline in traditional TV access contrasts with the growth in broadband and OTT services.

These findings from Convergence Research Group paint a clear picture of an industry at a crossroads, with traditional models being rapidly replaced by digital and streaming alternatives.