US Broadband Saturation Hitting SVOD, CTV Companies: Aluma

Adding new subscribers in a saturated marketplace will be “increasingly difficult and costly” for subscription VOD services, said Aluma Insights Tuesday, citing “too many competitors, too many macro-economic challenges, and too many structural factors working against them.” Netflix, Amazon Prime Video and Hulu were the first to suffer the impact of domestic saturation, it said, “but others will soon follow.” At the end of 2021, 85% of U.S. households subscribed to a high-speed internet service, up from 72% a decade earlier, creating “a 15-year boon” for related industries including SVOD providers, connected TV makers and retailers dependent on the growing reach of residential broadband to generate revenue and profits, Aluma said. “Those salad days appear to be coming to an end,” said the market research firm, saying the broadband uptake rate in U.S. households is “slowly declining,” indicating “nearing saturation.” As a result, despite CTV’s 23% and SVOD’s 32% “headroom” of potential households, their penetration will slow as broadband additions become “increasingly slow to materialize.” The warning signs of leveling “were clear,” said Aluma analyst Michael Greeson: "Unfortunately, it caught a lot of people off-guard, including the nation's largest SVOD, Netflix." Services need to “look inward for ways to optimize existing revenue sources,” Greeson said, and that includes monetizing the “tens of millions of users that borrow credentials and watch these services for free." Aluma and Adobe plan a free webinar June 22 at 2 p.m. EDT on SVOD market conditions, Greeson said.