Revenue for subscription and ad-supported streaming services totaled $16.7 billion in the third quarter, up 4% from the second quarter and 16% from a year ago, according to a report from Wells Fargo analyst Steven Cahall.
Cahall said that revenue growth had slowed in 2022, but has bounced back a bit to 3% to 5% in 2023.
“We expect revenue sequential growth to slow from +3-5% to +2-4% for the first half of 2024,“ Cahall said. “We expect price to be a bigger factor or even overtake sub growth as price hikes continue.”
For all of 2024, Cahall expects streaming revenue to hit $76.9 billion, up from $66 billion for 2023, and $85.7 billion in 2025
Netflix, with $8.5 billion, accounted for about 51% of streaming revenue.
“We think Netflix’s revenue market share will slightly decrease, but continue to hold the majority of the revenue market share with its pricing power,” Cahall said.
Core Disney Plus generated a 13% share of industry revenue, with Hulu accounting for about 10%; Paramount Plus had a 7% share; and Peacock had 5%.
Domestic ARPU (average revenue per subscriber was $10.68 per month, with Netflix having the highest ARPU, at $16.29.
Cahall expects ARPU to grow by 2.3% in 2023, 8.% in 2024 and 4.5% in 2025 as subscriber growth slows but streamers get more aggressive in raising prices.
In terms of added subscribers, Peacock grew by 17% in Q3, most of any of the services tracked by Wells Fargo. Core Disney Plus was up 7%.
Cahall notes that 70% of the streaming service net adds came from international markets.
Cahall says subscriber growth is slowing, from 17% in 2022 to 11% in 2023, 7% in 2024 and 5% in 2025. By 2025, Wells Fargo estimates there will be about 708 million total streaming subscribers.
