BOSTON: Video streaming in the US is approaching saturation point because growth in the amount Americans spend on services like Netlflix and Amazon Prime has fallen for the first time, a new study has revealed.
Research firm Strategy Analytics said video streaming revenue will increase 22% to $6.62bn in 2016, but that equivalent $1.19bn increase since last year marks the first time growth will be lower than the $1.21bn increase in 2015.
"Although the change in increase is relatively small, its direction is extremely significant," said Michael Goodman, Digital Media Director at Strategy Analytics.
"It shows that, whilst actual market saturation is a few years off yet, the domestic US streaming subscription market is now on the backside of the adoption curve. The incremental increase in annual dollar spend will decline from here on."
Indeed, Strategy Analytics expects annual growth in US consumer spend on streaming video subscriptions to fall to $1.04bn in 2017, declining further to $960m in 2019, before dropping to $540m by 2021, when growth will stand at just 8%.
The report estimates full market saturation to come in at 85% of US broadband households, or similar to saturation levels for pay TV, and there isn't too much room for growth because 60% of US broadband households already subscribe.
With nearly 40% of subscribing households signed up to at least two providers, coupled with many new services being launched in a lower price range, the report said international expansion will be important for future and faster growth.
Strategy Analytics further estimated that Americans will spend $19.9bn on home video in 2016, up 3.6% from last year, and that subscription video streaming will account for 35% of the total.
Overall revenues for the entire home video market, which includes $8.82bn from advertising on paid video on demand, is forecast to rise 8.3% to $27.3bn.
Data sourced from Strategy Analytics; additional content by Warc staff