Streaming ad revenue could grow by 40% over the next 4 years in the U.S.

Here’s the thing:

It’s no secret that major streamers are determined to build robust advertising businesses, as they diversify revenue and move away from subscriptions as the de facto measure of health.

Netflix, in fact, doesn’t report subscriber numbers per quarter anymore, emphasizing a focus on revenue growth over subscriptions alone. Disney, too, will stop regularly reporting the number of subscribers starting next year.

Now, there’s good news for streamers on the advertising front: A recent report suggests that advertising revenue could grow at a faster rate than subscribers over the next five years.

The PwC Global Entertainment and Media Outlook report projects that streaming advertising revenue in the U.S. could grow from $26.5 billion this year to $37.3 billion by 2029, a 40% increase.

Data debrief:

Meanwhile, PwC estimates that streaming subscription revenue could grow from $61.4 billion this year to $69.3 billion by 2029, a nearly 13% increase.

While subscriptions will still make up the bulk of streaming revenue in the U.S. over the next four years, advertising will see a bigger uptick.

Overall, PwC projects that total revenue generated from the U.S. streaming market — which includes subs, advertising and transactional video on demand — will grow from $93.7 billion this year to $112.7 billion by 2029.

Why it matters:

Advertising will continue to be a valuable revenue generator for streaming platforms as subscriptions potentially slow, at least in the U.S.

Both Netflix and Disney+ introduced advertising tiers in late 2022. Prime Video turned on ads for all subscribers starting last year, unless they opted out and paid an additional charge. Now, every major subscription video platform, save for Apple TV+, offers a cheaper ad plan.

At the same time, free ad-supported streaming TV (FAST) platforms — such as Tubi, Roku Channel and Pluto TV — are gaining momentum. According to PwC, the space could grow faster than the overall streaming market.

The report notes that FAST channels “appeal to cost-conscious consumers amid rising subscription fees.”