Streaming gains will likely accelerate from here: Citizens JMP

According to Citizens JMP, streaming has surpassed broadcast and cable combined in U.S. TV viewing, reaching 44.8% of U.S. TV time in May, and this trend is expected to accelerate due to scale advantages. The shift benefits streaming services by spreading content costs and offers advertisers broader access, particularly to younger audiences via AVOD, while Roku, The Trade Desk, and MNTN are positioned to capitalize on the reallocation of linear advertising budgets to CTV.

Analysis

Streaming has definitively overtaken traditional broadcast and cable television in U.S. viewership, capturing 44.8% of total TV time in May, according to Nielsen data cited by Citizens JMP, a figure that surpasses the combined 44.2% share of broadcast (20.1%) and cable (24.1%). This milestone is perceived not as a peak but as an accelerating trend, driven by inherent scale advantages that allow streaming services to amortize content costs over a larger user base and provide advertisers access to broader, younger audiences. The shift is particularly pronounced among younger demographics, with ad-supported video on demand (AVOD) becoming the dominant method for reaching teenagers, who have almost entirely moved to streaming for scripted content, leaving live sports as linear TV's "last stronghold." Notably, 46% of premium SVOD subscription tiers are now ad-supported, and 73% of connected TV (CTV) time is spent with ad-supported content. Despite this viewership dominance, streaming's share of advertising expenditure still lags its TV time share, presenting a significant growth runway. Citizens JMP anticipates a substantial reallocation of approximately $45 billion from U.S. linear advertising budgets towards CTV, structurally expanding the TV ad market. Key beneficiaries of these "CTV tailwinds" are identified as Roku (ROKU), The Trade Desk (TTD), and MNTN, while platforms like Netflix (NFLX), Google’s (GOOGL) YouTube, and Amazon (AMZN) Prime are also capitalizing on streaming's growth through various strategies including bundling and enhanced device access.

Key Decisions for Investors

• Investors should evaluate opportunities in companies directly benefiting from the migration of advertising spend to Connected TV (CTV), particularly those identified as key players in CTV advertising infrastructure and platforms.
• Monitor the growth trajectory of ad-supported video on demand (AVOD) services, as their increasing penetration and appeal to younger demographics represent a significant monetization pathway for streaming platforms.
• Consider the strategic positioning of companies like Roku and The Trade Desk, which are poised to capture share from the anticipated $45 billion shift in U.S. linear advertising budgets towards CTV and the overall expansion of the TV ad market.