PwC: Subscription TV market is fastest growing segment

By AdNews | 11 June 2018
Subscription TV is forecast to reach around $6.5 billion in revenue by 2022, but PwC's Brownlow says this growth has nothing to do with advertising.

The Australian subscription TV market is the fastest growing segment in spending according to PwC’s 17th annual Australian Entertainment & Media Outlook report, but the model could soon change according to PwC Australia entertainment and media industry leader Megan Brownlow.

The report analyses trends and consumer and advertising spend across 12 segments and shows spending is expected to rise at a compound annual growth rate (CAGR) of 3% over the next five years, but with sharp differences between industry segments and sectors.

See: PwC reports brands have failed in securing consumer trust

Subscription TV is forecast to reach around $6.5 billion in revenue by 2022, but Brownlow says this growth has nothing to do with advertising.

"This isn't driven by advertising, subscription advertising is pretty flat, just like free-to-air television. This is entirely driven by subscription television on demand, which currently is ad-free," she says.

Brownlow indicated that more consumers are taking to streaming platforms such as Netflix, Stan, Foxtel Now and Amazon Prime Video because they no longer wish to engage with video advertising.


However, she says that marketers and media buyers won't have to worry just yet, as PwC forecasts that these business models will eventually shift to drive advertising revenue.

"Consumers will pay for quality content that is ad-free, so in the future, we expect to see models where there is a free version with advertising and a paid version that is ad-free," Brownlow says.

"This will be a completely new strategy that will open the doors for further spend. However, it is vital for buyers to look into other growing, media options that are still in their infancy, such as podcasts."


Forecasted to rise at a compound annual growth rate (CAGR) of 10.1%, subscription TV is closely followed by the internet advertising market with a CAGR of 7.7%.

The internet ad market is forecast to reach close to $12.7 billion (65% of the total advertising market) in 2022.

PwC states it will overtake the internet access market ($11.5 billion). With rapid growth in video advertising, at a CAGR of 23.8%, the segment will account for a quarter of the total internet advertising market by 2022.


Despite the growth, the lingering issue with internet advertising sits with current measurement standards, such as click-through rates, which are based on transactional behaviour that does not reflect the preference-building role of high-quality advertising.

This is driving short-termism amongst advertisers and an inefficient allocation of advertising revenue.

Brownlow says one solution will be finding a consistent approach to measurement, ideally a multi-point attribution model, which will require intimate "collaboration between all industry players".

"It is possible to adapt to this. Models already exist, and while there may be some pushback, the smartest industry marketers will be the ones that adopt them first.

"This is the only way we can build a case for investing in building longer-term trust in brands. It's that long-term view versus the short-term."

Brownlow says marketers are now starting to taking more interest in brand safety when it comes to online advertising, actively blacklisting and whitelisting so that they are reducing the number of sites where their ads can appear.

They are also being much stricter about where they are programmatically allowed to appear.



PwC Outlook 2018. overview by all sectors

Free-to-air advertising:

PwC Outlook 2018. FTA ad market

Online video:

PwC Outlook 2018. online video ad market


PwC Outlook 2018. AVOD VS TVOD


Out of home:

PwC Outlook 2018. OOH

Radio and podcasting:

PwC Outlook 2018. radio and podcasting

Native advertising in magazines:

PwC Outlook 2018. native ads mags

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