nScreenMedia OTT multiscreen media analysis

U.S. versus global 2020 digital TV revenue forecast

global OTT TV $ video revenues by source 2019-2025

Digital TV Research gave its estimates for AVOD, TVOD, SVOD, and digital movie sales for 2020 through 2025. For the 2020 online TV revenue forecast, the U.S. will lead or match the global growth rate in each category.

Digital TV Research estimated growth through 2025

Digital TV Research released its revised forecast for global online TV revenue for the period 2020 to 2025. The company says there will be strong revenue growth in each of the four categories: rental, purchase, AVOD, and SVOD. Global SVOD revenue will increase by 51% between 2019 and 2025 to reach $97.5 billion. Electronic sell-through (EST) will increase by 38% to $10 billion, and rental revenue will grow by 26% to $6.3 billion. AVOD will experience the fastest growth, 55%, to reach $54 billion.

The company has considered the impact of COVID-19 shelter-in-place orders for 2020. It says AVOD growth will be considerably reduced due to “sagging advertiser confidence.” The company reduced its estimated growth for the year to 10%. DTV Research is expecting global SVOD revenue to grow 27% this year, rental revenue to increase by 6.3%, and EST by 11%. The U.S. should exceed the global growth rate in all four categories.

2020 SVOD revenue growth

DTV Research global growth rate, revenue: 27%, $61 billion

nScreenMedia U.S. growth rate, revenue: 27%, $20 billion

According to DEG numbers for Q1 2020, SVOD revenue is on track to grow at the global rate forecast by DTV Research. DEG says revenues increased 27% over Q1 2019. As well, with HBO Max releasing in May and Peacock launching nationally in July, the growth rate should be sustained. Revenues for the year should reach $20.2 billion, or about a third of the global SVOD revenue total.

2020 rental revenue

DTV Research global growth rate, revenue: 6.3%, $5 billion

nScreenMedia U.S. growth rate, revenue: 33%, $2.6 billion

DEG says that digital rental revenue grew by 20% in Q1 over Q1 2019, almost 10-times as much as Q1 2019 over 2018. As we are beginning to relax lockdown orders, expect the growth in Q2 to fall to 5% and then return to something approaching normal after that. With those assumptions, rental revenue will grow 33% in 2020 to reach $2.6 billion. In other words, U.S. rental revenue will be about half of the global estimate from DTV Research.

The U.S. rental market could deliver even more revenue. DEG did not include premium VOD sales like Trolls World Tour and The Invisible Man in its calculations. Trolls World Tour earned $100 million in the first three weeks of availability in April.

2020 electronic sell-through revenue

DTV Research global growth rate, revenue: 10.6%, $6.9 billion

nScreenMedia U.S. growth rate, revenue: 27%, $3.3 billion

DEG says that EST revenue in Q1 2020 was $750 million, up by 13% from Q1 2019. The growth was almost double Q1 2019. Assuming sales growth halves in Q2 2020 and then returns to pre-lockdown levels, EST should deliver about $3.3 billion in 2020, an increase of 27% over 2019. Once again, U.S. EST revenue makes up about half of the DTV Research estimate for 2020.

2020 AVOD revenue

DTV Research global growth rate, revenue: 9.9%, $26.7 billion

nScreenMedia U.S. growth rate, revenue: 23%, $7.6 billion

Last year, DTV Research estimated that U.S AVOD would grow 23% between 2019 and 2020. It could be that the U.S. AVOD market will come close to achieving that despite “sagging advertiser confidence.” Roku reported its first-quarter earnings last week. In the earnings call, the company admitted that ad rates had fallen, and advertisers sat on the sidelines waiting to see the impact of the C-19 emergency. However, the increase in time spent watching as people stayed home made up for the lower rates. The company reported average revenue per unit (mostly driven by advertising seen) grew by 5% over the previous quarter and 28% over Q1 2019.

Though other AVOD providers have not provided the same detail on Q1 performance as Roku, they do report the same effects: lower ad rates and increased viewership.[1] As well, most believe that though lockdown viewership rates will decline later in the year, they will settle at a much higher value.

In other words, AVOD revenue in the U.S. may well achieve or exceed DTV Research’s previous U.S. growth rate of 23%.

[1] nScreenMedia spoke with executives from Tubi and Pluto TV

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