The Cost of Streaming Services May Go Up As TV Ad Revenue Are Tanking & Predicted to Continue To Fall Amidst Writers Strike





Young couple sitting on a sofa watching scary movie on tv

GroupM is the world’s leading media investment company and has released some discouraging reports for television ad revenue predictions. Amidst a struggling economy and an entertainment industry nearly halted until the writers’ strike comes to an end, the group forecasts 2023 isn’t shaping up to be a profitable year for TV ad revenue streams, especially if the Actors Guild takes to picketing as well.

The report includes both traditional linear television and “connected TV” such as smart TVs, pure-play apps, and others that utilize digital ad-supported revenue from networks.

The group predicts that this year alone TV ad revenue will see a decline of 2.4 percent, bringing total ad revenue down to $67.7 billion by year’s end. That’s quite a difference from the 0.1 percent increase GroupM predicted back in December of 2022.

Traditional linear television is taking a harder hit than connected TV, which GroupM expects to jump up 11.6 percent by 2024. Linear television, on the other hand, has dropped 4.7 percent to $62.8 billion. Connected TV is swiping subscribers from traditional linear television, essentially. But overall, cord cutting is a big player in all of this. Fewer cable subscribers mean less ad revenue, an open feedback loop in a sense.

Streaming services use ad-revenues to keep subscription costs down. As that money supply dries up, it is very likely some services will be forced to raise prices.

This is promising news for connected TVs, which are expected to reach $21.5 billion in ad revenue by 2028. Massive entertainment interruptions such as the writers’ guild and possible actors’ strike aren’t expected to affect connected TV ad revenue numbers as abruptly and devastatingly as linear TV, which is looking at a nearly vacate upcoming fall season if negotiations aren’t resolved soon. Scripted as well as unscripted shows will be affected, with late-night talk shows likely to be affected the most. 

However, connected TV offers a host of streaming services which all have a massive content library to pull from to keep subscribers streaming. Platforms such as Netflix, Disney Plus, and Amazon Prime Video have halted production of some upcoming series and new seasons as well as placed a temporary hold on film productions. 

According to NextTV, “GroupM noted that first quarter revenues were down for all of the major broadcast networks excluding the Olympics and Super Bowl, but that the auto category is expected to fuel a recovery in the second half of the year.”

GroupM’s report states, “We believe the largest media owners, especially those with sports rights, are likely best placed to be able to manage through an extended strike.” Sports has been a big contributor to bringing in ad revenue for years. Last year alone saw 21 percent of all audiences tuned in for sports events.

U.S. digital ad revenue is forecasted to jump 9.7 percent this year, not including revenue from political ads which is estimated to reach $2.8 billion for both digital and linear television.

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