Ads are about to become even more important to streaming strategies for companies including Disney, Netflix, Warner Bros. Discovery and Amazon, according to a new study from firm PricewaterhouseCoopers.
In its Global Entertainment & Media Outlook 2024-2028, PwC projects that by 2028, “advertising will make up almost 28% of all the money that streaming services make,” marking a notable increase from the 20% streaming ad sales accounted for in 2023.
The entertainment and media industry, which PwC forecasts will reach $3.4 trillion as a sector by 2028, is estimated to see global subscriptions to OTT services rise to 2.1 billion by 2028 up from 1.6 billion in 2023 — a 5.0% compound annual growth rate (CAGR). However, the global average revenue per OTT video subscription is projected to only increase from $65.21 in 2023 to $67.66 in 2028.
Per PwC’s report, “This lack in revenue growth is likely because consumers are becoming overwhelmed by the number of streaming service choices. Companies are responding by offering lower subscription fees in exchange for showing ads.”
Ad spending, which surpassed consumer spending last year, is estimated to top $1 trillion in 2026, and will grow at a 6.7% CAGR through 2028. At that point, ad spending will be nearly double its 2020 total.
“One key factor to consider is the impact and contribution of advertising within the ecosystem,” PricewaterhouseCoopers U.S. partner Bart Spiegel told Variety. “With advancements in data monetization technologies, the ongoing shift towards digital platforms, and consumers’ willingness to allow advertising to subsidize their entertainment expenses, advertising growth is projected to surpass even consumer spending starting in 2025.”
Spiegel added: “According to PwC’s Global CEO Survey, 45% of CEOs believe their company will not be viable in ten years if it stays on its current path. This statistic emphasizes the need for businesses to reinvent their business models and reposition their portfolios in alignment with their future strategies. As demographics evolve, there is a growing emphasis on live, immersive, and experiential entertainment. We maintain the belief that this trend will significantly impact user engagement and compete for the discretionary time and spending in the entertainment and media sector.”