Advertising to Account for Almost 28% of Streaming Service Revenue by 2028

A new study by PwC indicates that advertising will become increasingly crucial for streaming platforms like Disney, Netflix, Warner Bros. Discovery, and Amazon. According to PwC’s Global Entertainment & Media Outlook 2024-2028, advertising is projected to account for almost 28% of streaming service revenue by 2028, up from 20% in 2023.

PwC forecasts that the entertainment and media industry will grow to $3.4 trillion by 2028. Global subscriptions to over-the-top (OTT) services are expected to rise from 1.6 billion in 2023 to 2.1 billion by 2028, with a compound annual growth rate (CAGR) of 5.0%. Despite this, the global average revenue per OTT video subscription is only projected to increase slightly, from $65.21 in 2023 to $67.66 in 2028.

PwC suggests that this slow revenue growth may be due to consumer fatigue from the plethora of streaming options. As a response, companies are lowering subscription fees and incorporating more advertisements to attract and retain subscribers.

Advertising spending, which surpassed consumer spending last year, is expected to exceed $1 trillion by 2026, growing at a CAGR of 6.7% through 2028. By then, ad spending will be nearly double its 2020 total.

Bart Spiegel, a PwC U.S. partner, highlighted the importance of advertising within the streaming ecosystem, noting advancements in data monetization and the shift toward digital platforms. He emphasized that consumers are increasingly open to advertisements subsidizing their entertainment costs, leading to the projected growth in advertising surpassing consumer spending by 2025.

Spiegel also pointed out that 45% of CEOs, according to PwC’s Global CEO Survey, believe their companies will not be viable in ten years if they continue on their current path. This underscores the need for businesses to reinvent their models and align their strategies with future trends. As demographics evolve, there is a growing focus on live, immersive, and experiential entertainment, which is expected to significantly impact user engagement and compete for discretionary time and spending in the entertainment and media sector.

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