Linear TV and Streaming Viewing Shares in 2025
In conversations about the future of TV it’s certainly widely understood that streaming content should grow in share of consumption over time. Perhaps the only question is: by how much?
I’ve argued in the past that there is a direct relationship between share of content spending and share of viewing. I revisited some of my assumptions around what that data looked like in the United States for 2022, and then look at what should happen over the next few years if the largest media companies try to hold the line on content spending in total, while concurrently supporting ongoing increases in spending on content for streaming services.
I estimate that in 2022, linear networks accounted for 70% of content spend while streaming services saw 30%. Not coincidentally, looking at data from Nielsen’s The Gauge on a simple average basis for each month, looking at viewing shares for broadcast and cable content relative to streaming – excluding YouTube - and I calculate around 29% of viewing goes to streaming while 71% goes to linear TV (including vMVPDs) on this basis.
With the assumptions about increases in spending on each streaming service or format amounting to a 15% CAGR through 2025 but with flat overall content spend we would calculate that streaming content will have around 46% of content spend – presumably with a similar amount of viewing. Needless to say, as network owners look to shift more programming to streaming on a relative basis – top-tier sports content, for example – it’s possible streaming’s share of content spend and thus viewing could go up.
Source: Madison and Wall, Company Reports
Over this period I would expect that consumer spending on video services will probably go up by a low single digit percentage as well, much as it did during the 2010s, with streaming spending growth offsetting declines in traditional pay TV, and as I’ve previously forecast, advertising should fall by low single digits next year and in 2025. Of course, the economics for network owners gets worse because of the ongoing marketing and content delivery costs associated with streaming services.
Growth opportunities aren’t necessarily going to go away, of course although they will be harder to come by. Any network that will increase its content budgets, program better or market better will be well positioned to drive audience or revenue share up and potentially keep costs down. International growth will also present opportunities, at least for those willing to continue to expand their content investment in more local-language content. More importantly, I think networks that find novel ways to bundle their video inventory and audience data as I outlined in a prior note, can find new ways to redefine a medium that’s otherwise poised to experience ongoing profitability declines.