U.S. consumer spending on digital home entertainment 1999-2023

Consumer spending on digital home entertainment in the United States has skyrocketed, reaching a value of over 41 billion U.S. dollars in 2023. This figure represents a staggering sixfold increase from just a decade ago, underscoring the rapid shift in consumer preferences towards digital options. The growth in online video entertainment has come at the expense of physical formats, with subscription video-on-demand (SVOD) services accounting for the majority of this spending.

A long and winding road to profitability

While SVOD services have experienced tremendous growth, they face challenges in maintaining profitability, prompting strategic shifts. To combat this issue, streaming companies have launched ad-supported tiers, introduced account-sharing fees, and implemented several cost-cutting measures. These actions aim to increase revenue and achieve positive income in the highly competitive streaming landscape.

The role of AVOD

The ad-supported business model seems to be a solid investment opportunity for growth in the digital video entertainment market. A 2023 survey found that over half of U.S. respondents were likely to subscribe to a streaming service with ads, with younger generations showing the highest interest. This trend aligns with projections for global AVOD revenue, which is expected to reach 68 billion U.S. dollars by 2029. The United States will remain the market leader at an estimated 22 billion U.S. dollars, followed by China. As consumers seek more affordable options, AVOD may play an increasingly important role in the video streaming world in the years to come.