A recent report from Omdia, a leading global analyst and advisory firm, projects that by 2025, revenue from video streaming services will exceed that of traditional pay-TV for the first time. The anticipated figures show streaming generating approximately $213 billion, compared to $188 billion for traditional pay-TV. This shift marks a significant milestone in the ongoing evolution of the media landscape.
The growth of video streaming is largely attributed to its adoption of business models that have historically defined traditional television. As streaming platforms like Netflix, Disney+, and Amazon Prime Video introduce advertising tiers, they are increasingly resembling pay-TV services. Tony Gunnarsson, a senior principal analyst at Omdia, notes that these platforms are “beginning to look like pay-TV 2.0.” This includes not only the integration of ads but also the adjustment of pricing strategies and programming formats.
Moreover, the concept of “linearisation” is emerging within the streaming sector. This trend involves structuring content delivery in a manner similar to traditional broadcasting, complete with weekly schedules for shows. Such strategies aim to replicate the familiar viewing habits of audiences accustomed to conventional pay-TV.
Omdia’s report also declares an end to what has been termed the “streaming wars.” The focus is shifting from aggressive subscriber acquisition to sustainable revenue generation through advertising and bundling services. As competition intensifies, platforms will likely turn to bundling standalone subscription video-on-demand (SVoD) offerings to enhance their market appeal.
“Until streaming looks and feels like pay-TV used to be, it will be cut-throat for everyone,” Gunnarsson emphasizes. This statement underscores the challenges that streaming services face as they navigate a landscape increasingly dominated by consumer expectations for convenience and value.
A significant driver behind the projected revenue increase for streaming services is their pivot towards advertising. By adopting hybrid models that combine subscription fees with ad revenues, these platforms can diversify their income streams. This approach not only attracts advertisers looking to reach engaged audiences but also allows consumers more flexibility in how they access content.
The introduction of ad-supported tiers has already proven successful for several platforms, enabling them to retain subscribers who might otherwise opt for lower-cost alternatives or free content available elsewhere. As more viewers become accustomed to this model, it is likely that ad revenues will play an increasingly pivotal role in the financial health of streaming services.
The anticipated decline in traditional pay-TV subscriptions is indicative of broader changes in consumer behavior and technology adoption. As audiences shift towards on-demand viewing experiences that offer greater flexibility and personalization, traditional cable providers may struggle to retain their subscriber bases.
Research indicates that by 2025, traditional pay-TV subscriptions could dip below 35% of American households, signaling a fundamental shift in how viewers consume media. This decline will force traditional providers to reconsider their service offerings and pricing structures if they wish to remain competitive.
The landscape of television is undergoing a seismic shift as video streaming services are set to surpass traditional pay-TV revenues by 2025. With innovations in advertising models and programming strategies mirroring those of conventional television, streaming platforms are poised for continued growth. As this transformation unfolds, both consumers and industry players will need to adapt to a new era defined by choice, accessibility, and evolving viewing habits.
