How would you go about estimating revenue of the streaming industry of a country (music and video) ?

Question

I am interested especially in how to segment the market (particularly as majority of households have more than one streaming membership) and there are many sources of revenue for a video/music streaming company like ad revenue, subscription, rental

Answer 1

Hello,

First of all you have to consider the volume both in terms of content volume (hours of streaming) and users. You can start from total households and segment them by age (for example, people from 60 to 80 often live in 2). Then, considering the kind of product that you sell, you can do some assumptions on the number of subscriptions and number of hours for each cluster.
Once that you have these numbers you can calculate your revenues:

Revenues from subscription = Total users x cost of single subscription
Revenues from ads = Total hours / Frequency of ADS x revenue per view

Hope it helps,
Luca

Answer 2

Hi,

The standard approach here would be as follows

1. Estimate the population of the country (e.g., 320M for USA)

2. Divide into households (e.g., 100M households in USA)

3. Make assumptions on number of streaming services per household. For example you could say a typical household has 3 video streaming services and 1 music service at ~$15 per service per month). You will have to give reasons for why you picked that number such as personal observations based on what you and your friends might do

4. Calculate revenue - above it is $60*100M *(12 months a yr) so ~$72B a year

Hope this helps!

Udayan

Answer 3

Hi,

First, you have to make an assumption on the number of households / subscriptions. You can split them into multiple segments.

Secondly, you have to make an assumption on revenue streams:

Subscriptions are pretty straightforward
Ad revenues - just use the average price of CPM (views) as 50$ and make an assumption on how frequently you see the ads

Best