Steady -- but not soaring -- historical consumer spending on all kinds of video -- traditional TV, cinema, streaming, and otherwise -- is unlikely to lead to many new streaming profitable operators anytime in the near future, according to one media agency analyst.
Brian Wieser, global president of business intelligence for agency group GroupM, writes in a recent report:
“If consumers continue to increase their spending on all forms of video -- which amounted to $140 billion last year for video services, cinema and DVDs -- at historical rates through 2024, there will only be an incremental [emphasis added] $20 billion in consumer spending available for new services.”
This $20 billion in consumer spending is also the amount of incremental video content spending of streaming services per year -- which means profitability will be difficult, he says, especially because of low- or discounted pricing on monthly streaming services.
Wieser sees streaming services' (from the likes of Netflix, Apple TV+, Disney+, Amazon, and the forthcoming HBO Max and Comcast’s Peacock) annual content spending totaling $30 billion per year.
He warns that potential advertising revenues for these new premium streaming services won’t help overall financial health.
“Unfortunately, advertising is not likely to be incremental for the industry,” says Wieser. He adds: “There is only a limited relationship between changes in supply or improvements in targeting and changes in total spending in the advertising industry, unless new advertiser segments are brought into the medium.”