As the landscape of subscription video on demand (SVoD) evolves, a noticeable shift is occurring among streaming platforms—one that prioritizes profitability over sheer subscriber numbers. An insightful report by Ampere Analysis presents a critical perspective on this trend, forecasting a significant divergence in revenue growth and subscriber acquisition over the next five years. The analysis highlights that subscription streaming revenues are anticipated to surge nearly three times faster than new subscriber growth, showcasing a marked change in strategy for platforms like Netflix, Disney+, and others.
The report estimates that by 2029, the global subscription streaming market will amass over $190 billion, positioning Netflix to account for nearly one-third of that revenue. However, the predicted increase of just 200 million subscribers globally, reaching a total of 2 billion, demonstrates a stark contrast to the pandemic-driven growth observed in recent years, when subscriber numbers effectively doubled due to heightened demand. This notable slowdown is attributed to market saturation, particularly in the U.S., and indicates a challenging landscape for acquiring new subscribers.
The changing approach among streamers can be traced back to pressures from financial markets demanding profit-oriented strategies. Netflix was an early adopter of this philosophy shift, leading other platforms to rethink their business models amid a contracting market illustrated by Hollywood strikes. Consequently, services have introduced alternative revenue streams, like advertising tiers and new restrictions on password sharing, to bolster their financial health. Ampere estimates that the pivot to ad-supported models may generate an extra $22 billion in ad revenue, signifying a new directional focus for traditionally ad-free platforms.
Regions like Asia-Pacific (APAC) are now recognized as critical areas for future subscriber increases, as North American markets reach saturation point. The Ampere report underscores that nearly a third of the anticipated subscriber growth will emanate from APAC, with projections indicating the region could contribute around 600 million new subscriptions by 2029. This anticipated growth is essential for platforms as they navigate the complexities of audience expansion and sustain their profitability goals.
Streamers are increasingly directing their investments toward less saturated markets, particularly in countries such as India and Korea, where significant cultural phenomena like the next season of “Squid Game” are poised to capture viewer interest. Ampere’s Research Manager, Maria Dunleavey, emphasizes that to exceed current expectations, streaming services need to make substantial strategic investments in these high-potential regions. Central and South America, as well as Central and Eastern Europe, are identified as markets ripe for growth, with potential subscriber gains of 20% anticipated in the next five years.
The SVoD landscape is witnessing a pivotal transformation as streaming services adapt their strategies from sheer subscriber growth to a more sustainable profit-driven model. This evolution is poised to reshape the industry over the next half-decade, compelling platforms to rethink their investment priorities while exploring untapped markets. The future landscape of streaming will likely reflect these new dynamics, with a concerted emphasis on profitability over mere metrics of subscription numbers.