Unusual conditions over the past year accelerated trends that are kicking off a new era in media consumption. Streaming video viewing gained massive traction, especially on connected TV (CTV) devices.
2020 saw US CTV ad revenues soar to new highs in tandem with rising consumer demand. According to the research data analyzed and published by Comprar Acciones, Hulu was the top seller in the segment in terms of net revenue, generating $1.96 billion from CTV ads.
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YouTube came in second, generating $1.5 billion. It had the highest gross revenue of $2.89 billion. Roku was third with $735.4 million.
In 2021, the three are forecast to be the top players once again. However, Hulu’s market share which stood at 24.2% in 2020 is set to decline to 22.9%. On the other hand, YouTube will grow its share from 18.5% in 2020 to 19.6%. Similarly, Roku’s market share is expected to expand from 9.1% to 10.1%.
The three are projected to hold a cumulative market share of 52.6% in 2021. From the remaining 47.4%, a significant chunk is expected to go to Amazon. Amazon sells CTV ads for its Fire TV and IMDb TV streaming service.
Total US CTV ad revenue which stood at $8.11 billion in 2020 is projected to increase to $11.36 billion in 2021. By 2022, it is estimated to reach $14.11 billion. Notably, the figure stood at $6.38 billion in 2019.
Roku Set to Capture 10.1% of US CTV Market in 2021
In the US market, Roku is considered the third undisputed leader in CTV devices. It is expected to capture 10.1% of the US CTV market in 2021. To a large extent, the performance will be driven by strong sales of its smart TVs and stand-alone streaming devices.
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During the first three quarters of 2020, Roku reported 57% growth in revenue. For its lower margin players which accounted for a 29% share of revenue, sales shot up by 40%. Its higher-margin software platform, on the other hand, saw sales surge 66%, accounting for 71% of revenue.
In Q3 2020, active accounts on the service shot up by 43% compared to a similar time in 2019, reaching 46 million. The average revenue per user grew by 20%. However, with the pandemic limiting sales of its higher margin ads, the gross margin dropped. Analysts project that its revenue will grow by 54% in 2021 and a further 39% in 2022. Roku is just one of many streaming platforms that enjoyed robust growth in 2020 and expect even higher gains in 2021.
For the global video streaming market as a whole, Valuates Reports projects a compound annual growth rate (CAGR) of 18.3% between 2019 and 2026.
27% of US Cable TV Subscribers Plan to Cut the Cord in 2021
Among the reasons behind the growth is the growing trend of cord-cutting. According to Trade Desk data, 27% of US cable TV subscribers plan to cut their subscriptions in 2021.
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Streaming consumption in the US now accounts for 68% of TV viewing compared to traditional TV’s 28% share. As of January 2021, less than 50% of US households have cable subscriptions according to Trade Desk. Even traditional cable mainstays like live sports are not keeping viewers on TV. Almost 39% of sports viewers now watch events via CTV on social media and ad-supported streaming platforms.
Only 30% of consumers in the US maintain their cable TV subscriptions in order to watch live sports. That is a significant decline from the 60% who did so nine months ago.
Cord-cutting trends were already under way prior to the pandemic, but it served to accelerate the shift. The loss of live sports in the first half of 2020 as well as the overall down economy contributed to the acceleration of the trend.
According to eMarketer, more than 6 million US households cut the cord with pay TV in 2020, reaching a total of 31.2 million cord-cutters. By 2024, the report projects that the total number will have reached 46.6 million.
The loss in TV viewership has resulted in reduced TV ad spending. Total US TV ad spend dropped by 15% from $70.59 billion in 2019 to $60.00 billion in 2020. That was the lowest figure on record since 2011.
The Interactive Advertising Bureau (IAB) projected that in 2021, 60% of US advertisers would move ad dollars from linear TV to CTV or OTT. 55% of those planning the shift cited incremental reach as their key reason while 81% pointed to efficiency and targeting.
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