Linear Video Might be Dying, But it Still Throws Off Huge Profits, Compared to Steaming

Changing markets are very hard to track, as share in a t;raditionally-defined market often shifts to suppliers in “other” markets. Looking only at entertainment video, for example, one might see a “share pattern” that crosses industry boundaries. 

In this illustration, showing estimated time spent with video content, linear video is shown in blue, streaming video in orange, social media in green, gaming in orange. 

“Time spent” correlates with, but is not the same thing as “market share” measured by revenue. 

In the United States in 2023, for example, “video entertainment” still was led by traditional linear TV, but streaming services are displacing linear usage. Also, social media and gaming represent alternative uses of free time entertainment that arguably are substitutes and replacements for entertainment video consumption. 

Segment	Market Share (2023)
Traditional Linear Networks:	57%
New Suppliers (Streaming Platforms, On-Demand Content):	23%
Gaming:	10%
Social Media:	10%

Linear video arguably still “over indexes” as a revenue source, even if its consumption is down dramatically since 2000. 

Segment	Revenue (USD Billion)	Percentage
Traditional Linear TV:	68.8	28.4%
- Advertising:	49.2	20.3%
- Subscriptions:	19.6	8.1%
Streaming Services:	58.6	24.1%
- Subscriptions:	48.4	19.9%
- Advertising:	10.2	4.2%
Gaming:	56.2	23.2%
- Digital Games:	48.4	20.0%
- Hardware & Accessories:	7.8	3.2%
Social Media:	38.2	15.7%
- Advertising:	37.2	15.3%
- Other Revenue:	1.0	0.4%
Other Video Sources:	7.2	2.9%
Total:	241.0	100.0%

And, revenue is not the same as profit. 

Average profit margins for media companies typically range from 10- to 20 percent. Assuming a 15 percent margin on linear TV revenue of $68.8 billion, the profit would be approximately $10.32 billion.

Profit margins for streaming services vary significantly. Netflix, for example, had a profit margin of around 10 percent in 2022 while most services arguably were not yet profitable. Applying a conservative five-percent margin to streaming revenue of $58.6 billion would result in a profit of approximately $2.93 billion, all of it earned by Netflix, which in 2022 had around $5 billion in profits. In other words, except for Netflix, few, if any, streaming services were yet profitable in 2022. 

The average profit margin for video game companies is around 20 percent. If gaming revenue is $56.2 billion translates to a profit of approximately $11.24 billion.

Meta reported profit around 15 percent in 2022. Assuming a similar margin on social media video revenue of $38.2 billion, the profit would be approximately $5.73 billion.

So gaming and linear video generate 71 percent of all profits of the actual profit, with social media and video streaming contributing the balance.