According to Deadline, PwC published a study yesterday saying that the television industry in the US should expect a decrease of 30 billion dollars less in its traditional subscriptions (like cable) and ad revenue than it did ten years ago. The major reason cited for this change is cord cutting and the shift to streaming services.

For the first time, in quarter three of 2022, the number of traditional pay-tv subscribers fell below half the number of total US homes. According to predictions in PwC’s Global Entertainment & Media Outlook 2023-2027, by 2027, the number of US homes that are subscribed to traditional TV subscriptions will jump down to 49.9 million, meaning traditional pay-TV will be present in only 38% of US homes.

With the shift to streaming, combined with our difficult economic climate, most streaming services will shift to having an ad-supported pricing plan. This shift to streaming is still a fragile one because shows released on pay-TV are providing much of the cash that supports streaming.

“The biggest tectonic move continues to be the rise of ad-supported streaming. AVOD will be the main driver of growth in the US OTT sector across the forecast period,” the PwC report said. “Revenue increasing at a 14.2% CAGR – well ahead of SVOD’s increase at a 6.1% CAGR – and growing its share of total revenue from 34.8% in 2022 to 44.3% in 2027.”

According to the report, this change is still concentrated in the US. “But the forecast period highlights the increasing saturation of the US market and the future commercial challenges that pose for pure-play OTT and traditional cable and TV companies in the sector,” PwC said.

Connected TVs are expected to continue to be important in this change. PwC expects smart TV advertising to bring in a revenue of 21.3 billion dollars in 2027.