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Video Services: OTT, Pay TV

OTT Market Saturation Drives Adoption of Ad-based Models and Lower Spending

The vast majority (83%) of US internet households now subscribe to one or more OTT streaming services. Coinciding with the COVID-19 pandemic, the percentage of households subscribing to four or more such services tripled from 2019 (7%) to 2020 (22%), and more than doubled again in 2021 (46%) before slowing in 2022 (50%).

This saturation is partially due to the rise of new, strong competitors such as HBO Max and Disney+ at the upper end of the market. In addition, the growth in ad-supported services—both free and lower-priced subscription tiers—is likely to continue to sustain subscription growth for the near future by accessing a broader available market than previously possible with full-price subscriptions.

Another illustration of the impact of ad-supported services can be found in the decline in household spending for OTT services. Overall, among all OTT subscribers, average total spending declined by about 11% from Q1 2021 to Q2 2022. During the same period, however, spending by households with one, two, or three OTT subscriptions was up slightly, while spending among households with four or more subscriptions declined some.

This is an excerpt from Parks Associates just published report, Ad-Based OTT: Growth in FAST and AVOD Services. The research explores factors driving the growth of ad-based online video, profiles and compares market leaders, and assesses consumer preferences in watching ad-based content. It quantifies the number of households using ad-based online video services and includes a five-year forecast of viewer growth.

Key questions answered:

  • What is the state of the ad-supported video streaming market?
  • What is the difference between FAST and AVOD, and which OTT services are using each model?
  • What factors are contributing to the growth of ad-supported streaming services?
  • Which ad-supported streaming video services are most popular?
  • How will new subscription tiers from Disney+, Netflix, and others affect the market?
  • Thank you for your support of our research. If you are interested in our services, please contact me directly or reach out to any of our team.

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