The pandemic saw video streaming services achieve more than five years of projected growth during the COVID-19 peak years of 2020 and 2021 – but that boom period is now over, according to a new report.
The gradual return to a more normal world likely isn’t the only factor at play, though …
Background
Widespread lockdowns meant that demand for in-home entertainment soared during the first two years of the pandemic. It came at a particularly good time for Apple, as Apple TV+ launched just a few months before COVID-19.
The pandemic may not be over, but high vaccination rates and natural immunity from past infections are seeing the world return to something much closer to pre-COVID-19 conditions, with all of the out-of-home entertainment options back in operation.
That’s seen demand for streaming entertainment return to more normal levels – with more conventional levels of growth. For some services, that has meant a loss of subscribers. Netflix, for example, recently reported the loss of 200K subscribers, and warned that it may lose as many as 2 million this quarter.
It’s a similar story with streaming music, with a report last week saying that Apple Music was among the services to have lost a total of a million UK subscribers last quarter.
Video streaming services see reduced growth
Variety reports on the latest data and projections from management consultancy giant PwC.
In 2022, SVOD [Streaming Video On Demand] 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.
Things are expected to be worst in the biggest market, the US.
In the U.S., TVOD will experience a year of negative growth in 2022 — down 8% this year, to $6.13 billion.
9to5Mac’s Take: The hit to video streaming services
Post-pandemic fall-off is undoubtedly the biggest factor, but it’s not the only one. We’ve been warning for years of subscription fatigue, affecting apps, streaming music, streaming video, and other services with a recurring monthly cost. Individually small sums add up.
And now inflation has added to the mix, with energy costs in particular skyrocketing.
Annual inflation rate in the US unexpectedly accelerated to 8.6% in May of 2022, the highest since December of 1981 and compared to market forecasts of 8.3%. Energy prices rose 34.6%, the most since September of 2005, due to gasoline (48.7%), fuel oil (106.7%, the largest increase on record), electricity (12%, the largest 12-month increase since August 2006), and natural gas (30.2%, the most since July 2008). Food costs surged 10.1%, the first increase of 10% or more since March 1981.
That’s made a huge dent in most people’s discretionary spending, and it’s no surprise to see luxuries like video on demand be hit hard.
Photo: Glenn Carstens-Peters/Unsplash
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