Advertising growing share of revenue for television
Subscriptions drive most revenues for traditional TV and streaming services but advertising is gaining share. Although subscriptions will account for about two-thirds of total revenues for US streaming services in 2025, that share will slowly decline as marketers invest more in connected TV (CTV). Between 2023 and 2027, advertising’s share of total streaming revenues will increase by nearly 4 percentage points, marketing consultancy Emarketer says in a forecast.
“This means advertising revenues are growing faster than subscription revenues. In 2025, US streaming subscription revenues, excluding digital pay TV services, will increase 10.6% year over year. And US CTV ad spending will increase 15.8% year over year.”
Highlights:
- In 2024, traditional TV accounted for less than half of US total video subscription revenues for the first time. Its share will slip to about one-third by 2028.
- The cost of pay TV packages and inflation have increased at similar rates in recent years. But over the past two years, streaming has gotten much more expensive relative to both.
- The rate at which digital pay TV makes up for cord-cutters is shrinking. By 2028, only one-third of US households that have abandoned traditional TV since 2015 will have adopted digital pay TV.
- Subscriptions—not ads—are still the largest revenue source for streaming services. About two-thirds of streaming revenues come from subscription fees.
The report says that Alphabet-owned YouTube quietly has developed a strong subscription business.
“Although YouTube is usually used as a free service monetised through ads, it says its YouTube Music and Premium services now have more than 100 million subscribers worldwide.”
YouTube TV early last year said it had more than 8 million subscribers in the US. According to Emarketer, the company will get more than $13 billion in US subscription revenues from YouTube Premium and YouTube TV combined in 2025.
“YouTube has driven more people toward paid plans in part by aggressively fighting ad blockers.”
The report says streaming sports rights are helping drive subscription revenues away from traditional pay TV providers and toward streaming services.
“We forecast that live sports viewing will keep shrinking on traditional TV and growing on digital services. In 2022, more sports viewers watched via traditional TV than digital services. By 2027, digital sports viewers will outnumber traditional TV sports viewers by 52 million.”
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