There has been an obvious shift in media consumption. Our movie watching has shifted from buying DVDs to streaming Netflix, and our music listening has gone from buying CDs to streaming Spotify.
Consumer habits are shifting from ownership to streaming over the web. Here’s a look at how rapidly this shift is happening.
In 2015, streaming revenues were more than $2.4 billion, passing the $2 billion mark for the first time ever. That year, streaming was one-third of U.S. music revenues (34.3%). The remainder of the revenues were from digital download (34.0%), physical (28.8%) and sync (2.9%).
Revenue from streaming is a growing segment of the market:
- 2010: 7%
- 2011: 9%
- 2012: 15%
- 2013: 21%
- 2014: 27%
- 2015: 34%
Worldwide, the number of people paying for music subscriptions is growing. In 2013, it was 28 million, and in 2015, it was 41 million people. Within streaming revenues, paid subscription services are the quickest-growing category of services. Paid subscription (Ex: Spotify subscription, Apple Music)
- 2013: 639 million
- 2014: 800 million
- 2015: 1.2 billion
Sound exchange distributions (Ex: Pandora, SiriusXM)
- 2013: 590 million
- 2014: 773 million
- 2015: 803 million
On-demand, ad-supported (YouTube, ad-supported Spotify)
- 2013: 220 million
- 2014: 295 million
- 2015: 385 million
Why people are streaming:
Streaming is changing listening habits, allowing users to easily explore new music and enabling digital algorithms to become personalized DJs that recommend new artists. Streaming music is accessible wherever you are — at the office, in the car or at the gym. Bandwidth restrictions (whether via cellular data caps or Wi-Fi) are not as much of an inhibitor as they once were, making streaming viable, easy and affordable.
60% of U.S. broadband households subscribe to a video streaming service. The sales of DVDs and Blu-ray discs are decreasing, and subscription services are gaining more customers.
U.S. sales of DVDs and Blu-ray discs:
- 2015: $6.1 billion
- 2014: $6.9 billion
- 2013: $7.8 billion
- 2012: $8.5 billion
- 2011: $8.95 billion
Paid subscriptions (streaming and disc)
- 2015: $5.7 billion
- 2014: $4.8 billion
- 2013: $4.2 billion
- 2012: $3.6 billion
- 2011: $3.3 billion
Netflix is the top video streaming service provider with 53% of all subscribers. Amazon Prime follows with 25% of all subscribers, and Hulu has 15%. Interestingly, 40% of households that stream have multiple streaming services.
Netflix has 83 million subscribers (42% from outside the U.S.). Subscribers watch an average of 1.8 hours a day, and 70% of users binge-watch shows.
Why people are streaming:
Consumers are prioritizing on-demand content over the higher quality of a Blu-ray picture. Algorithms are helping customers easily discover or search for content that will interest them, making the process of discovering content as enjoyable as watching it. “Binge watching” has become a phenomenon now that users have easy access to a huge amount of content. Avoiding advertising is a significant influencing factor, with research showing that Netflix users avoid 160 hours of ads per year.
Consumers are increasingly shifting their spending toward access rather than ownership. And it’s happening in more than just media choices; we see companies like Zipcar and Airbnb also thriving in the new “sharing economy.”