TV Advertising leads growth in global streaming to 2029

Industry Insights: The growth of streaming and OTT services is set to continue over the next six years, with a particularly rapid increase in ad-supported offerings.

TV Advertising Growth

Projected streaming revenues by 2029

Digital TV Research has just completed its series of reports forecasting the future of all types of streaming worldwide, including the overall OTT market and the rapidly expanding FAST (Free Ad-Supported Television) revenues. While the detailed reports are available for purchase, they have shared some intriguing findings. Here are the key predictions for the years 2023 to 2029:

• Global OTT TV episode and movie revenues are expected to reach $215 billion by 2029, showing a substantial increase of $53 billion or 33% from the $162 billion in 2023.
• Tiered services will also experience growth. Leading platforms such as Netflix, Disney+, HBO, and Paramount+ are projected to generate hybrid AVOD-SVOD (Ad-Supported Video on Demand and Subscription Video on Demand) revenues of $20 billion by 2029, compared to $6 billion this year. These hybrid revenues will be roughly evenly split between AVOD and SVOD.
• AVOD revenues for TV series and movies are estimated to reach $69 billion by 2029, reflecting a $30 billion increase. The US’s share of the 2029 AVOD total is expected to decrease from 40% in 2023 to 31%, indicating faster growth in other countries.
• Global SVOD revenues are projected to increase from $107 billion to $127 billion. The US and China will contribute to half of the 2029 total, with the US adding $2 billion to the extra $20 billion in SVOD revenues between 2023 and 2029. Other countries, including Brazil, Germany, Japan, and South Korea, are also expected to see growth.
• The six major US-based streaming platforms will add $12 billion in SVOD revenues from 2023 to 2029, totaling $72 billion. Netflix is predicted to maintain its lead in SVOD revenue, with an expected $34 billion by 2029, surpassing Disney+, HBO Max, and Paramount+ combined.
• FAST revenues for TV series and movies are anticipated to reach $17 billion, up from $8 billion. The US’s contribution to the 2029 total will decrease from 56% in 2023 to 38%. By 2029, the US will be the only country generating over $1 billion in FAST revenues. The UK and Canada are expected to be close to $1 billion, with these three countries accounting for nearly half of the world’s total.

When examining the growth of each format, it becomes evident that advertising-supported services are leading the way.

Amazon Prime Video to Introduce Ads

As an illustration of this trend, Amazon Prime Video announced its plans to introduce advertising into its content streams next year. The initial rollout will include the US, UK, Germany, and Canada, with additional countries (France, Italy, Spain, Mexico, and Australia) following in 2024.

In Amazon’s words: “To continue investing in compelling content and keep increasing that investment over a long period, starting in early 2024, Prime Video shows and movies will include limited advertisements. We aim to have meaningfully fewer ads than linear TV and other streaming TV providers.”

This move is in line with the approach taken by several other services that have transitioned to an ad-supported model while still offering an ‘ad-free’ option at a higher price point. In the US, the ad-free option will come at an extra cost of $2.99 per month on top of the current monthly fee of $14.99. Pricing for this option in other regions is yet to be determined but will likely see a similar 20% increase.

As things stand, Apple TV+ is the only major global streaming service that does not include advertising. However, it does feature extensive promotion slots promoting its own content, indicating the capability to run ads if desired.

Growing Acceptance of Ads by Viewers

In a final note, Hub Entertainment Research’s study challenges the notion that TV viewers strongly dislike ads. Their data, in fact, shows the opposite.

In their recent TV Advertising: Fact vs. Fiction study, Hub found that nearly all TV viewers (97% in the study) watch ad-supported content. Additionally, three out of five viewers expressed a preference for ad-supported platforms if it meant saving $4-5 per month compared to an ad-free service.

Remarkably, this preference held true even among the third of respondents who claimed to have a low tolerance for TV ads. The key takeaway is that viewers appreciate having a choice regarding whether or not to accept ads, and they can switch between services at their discretion.

This year marks the first time that most viewers favored services offering tiered plans over those that were exclusively ad-supported or ad-free. This shift indicates that TV advertising provides a real benefit when consumers are subscribing to multiple video services. Providers are encouraged to maintain reasonable ad loads and commercial breaks to ensure satisfaction among subscribers and advertisers alike.