BOSTON—A recent report from Strategy Analytics shows that spending on video streaming will increase by $1.19 billion in 2016 to a total of $6.62 billion, but according to Strategy Analytics, this is a sign of the market beginning to slow down. The reason for that belief is that for the first time the growth rate of the video streaming market to be less than the previous year—$1.21 billion in 2015—indicating that the market may be reaching saturation.
“Although the change in increase is relatively small, its direction is extremely significant,” said Michael Goodman, Strategy Analytics’ digital media director. “It shows that, whilst actual market saturation is a few years off yet, the domestic U.S. streaming subscription market is now on the backside of the adoption curve. The incremental increase in annual dollar spend will decline from here on.”
Nearly 60 percent of homes subscribe to a video streaming service, i.e. Netflix, Amazon, or Hulu. An estimated 40 percent of households subscribe to at least two video streaming services, per Strategy Analytics. Goodman notes that market saturation resides around 85 percent for broadband households. He forecasts that annual growth will fall below 8 percent within the next five years.
Additional findings of the report include other methods of consumer spending on home video. DVD/Blu-Rays are the second most popular format, but that method is declining 7 percent for purchases to a 30 percent consumer and 10 percent for rentals to 14 percent. Downloading is on the rise, inversely, with 17 percent purchasing downloads; download renting is down however to 5 percent.
Overall, Americans are predicted to spend $19.09 billion on home video in 2016, a 3.6 percent increase from 2015. With the addition of advertising’s $8.82 billion, overall revenues are expected to hit $27.3 billion, an 8.3 percent growth.
Read the full report here.