Subscription streaming video is cooling down from torrid growth rates seen in 2020 and ’21 — fueled by pandemic lockdowns — but is still experiencing healthy expansion in the U.S., one of the segment’s most mature markets.
In 2022, SVOD services in the United States will generate revenue of $25.32 billion, up 13% from last year, according to PwC’s Global Entertainment & Media Outlook 2022–2026 report, released Monday. The segment is projected to reach $33.59 billion by 2026, representing an 8.5% compound annual growth rate from 2021-26.
The 13% uptick projected for this year is down from 19.5% annual growth in 2021 and a whopping 27% increase in 2020 for U.S. SVOD. The PwC study noted that, in the U.S. and many other parts of the world, the COVID pandemic propelled over-the-top video uptake years ahead of where it would otherwise have been — a “pull-forward” effect seen by many services.
Market leader Netflix has seen subscriber numbers turn negative in the first half of 2022, losing 200,000 in Q1 and expecting a net loss of 2 million in Q2, after enjoying huge gains the two prior years. Netflix also is facing aggressive competitors like Disney+ and HBO Max, amid a broader economic backdrop of rising inflation.
“Netflix is no longer the single big-name player, but is instead joined by a number of high-profile services, each with exclusive and desirable content,” the PwC report says.
The U.S. remains the largest OTT video market, generating $29 billion across SVOD and transactional VOD (electronic sell-through and rentals) segments in 2021. China was No. 2, with OTT video revenue of $11.4 billion last year.
While TVOD performed well in 2020 and ’21, SVOD will continue to account for the majority of revenue growth in the OTT segment. In the U.S., TVOD will experience a year of negative growth in 2022 — down 8% this year, to $6.13 billion — mainly driven by a reversal of theatrical windowing changes in the U.S., per PwC’s report.
For total OTT video revenue, Latin America will double in size over the forecast period, from $2.5 billion in 2021 to $4.6 billion in 2026, despite being the smallest global region. Asia Pacific will be the second-fastest-growing market from 2021-26, followed by EMEA and North America.