United States OTT Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

United States OTT Market Trends and Insights

Rising Cord-Cutting Rates Among US Households Accelerating Direct-to-Consumer Adoption

Cord-cutting surpassed 46% of U.S. internet households in 2025, equating to roughly 56 million homes that have severed cable subscriptions. A further 12% are “cord-nevers,” having bypassed pay-TV altogether. Ad budgets follow these viewers to connected TVs, yet inconsistent measurement standards hamper cross-platform attribution. Platforms in the US OTT market, respond by deepening first-party data collection and experimenting with loyalty perks reminiscent of cable bundles. Sustained success hinges on exclusive premieres that keep monthly churn, now 5-6%, from rising further.

Rapid Expansion of Fiber and 5G Networks Enabling Higher-Quality Streaming

Federal grants and private capital pushed average fixed-line speeds beyond 250 Mbps in major metros during 2025, enabling consistent 4K and HDR playback and slashing buffering events.^{[1]Federal Communications Commission, “2025 Broadband Progress Report,” fcc.gov} Latency reductions support interactive layers such as real-time polls and live betting overlays on sports streams in the US OTT market. Platforms upsell premium picture tiers, easing ARPU pressure, and users maintain multiple concurrent streams per household, extending total watch time.

Shift Toward Ad-Supported and Hybrid Models Expanding Audience Reach

More than half of new Disney+ sign-ups in 2025 chose the ad-supported tier. Netflix reported that its own ad plan drives 45% of viewing hours in regions where it is available. Light ad loads under five minutes per hour safeguard user experience, while granular targeting commands CPMs rivaling prime-time TV. As fill rates climb, ad-funded tiers are on course to out-earn flat-fee subscription plans on a per-user basis.

Adoption of AI-Powered Hyper-Personalization Increasing Average Watch Time and Retention

Netflix algorithms now influence 80% of viewing decisions, learning from pause length, rewind frequency, and time-of-day viewing. Disney’s 2025 partnership with OpenAI will allow subscribers to create short clips starring classic characters, a feature set to debut in 2026. Such personalization reduces search friction, critical as the average time users spend hunting for content reached 12 minutes in 2025. Platforms that surface relevant titles quickly post higher retention and lower marketing spend.

Growing Content Licensing Costs and Competition for Premium IP Squeezing Margins

Netflix earmarked USD 17 billion for content in 2025, a figure that includes record bids for National Football League rights.^{[2]Netflix Inc., “Q4 2025 Shareholder Letter,” netflix.com} Inflation persists because premium intellectual property supply grows slowly while bidder counts soar. The proposed Netflix-Warner Bros. merger seeks to curtail third-party licensing by owning production outright. Smaller platforms facing the same cost spiral pivot toward niche libraries or risk forced consolidation.

Market Saturation and Subscriber Churn Fueled by Low Switching Costs

Monthly churn hit 5-6 percent across major services in 2025. Crackdowns on password sharing briefly inflated cancellations before incremental account conversions stabilized revenue. As household subscription penetration nears 100%, competitive focus shifts to retention via stacked release calendars, gamified rewards, and deeper personalization.

Segment Analysis

By Revenue Model: Hybrid Monetization Extends Reach

Subscription video on demand controlled 45.23% of United States OTT market share in 2025, yet ad-supported and free channels are advancing at a 12.13% CAGR. The United States OTT market size attributable to advertising-funded services is positioned to more than double by 2031. Disney disclosed that 112 million of its 157 million global ad-supported monthly active users reside in the United States. Younger viewers are willing to tolerate ads for reduced fees, while older viewers retain ad-free tiers. Diversified monetization spreads risk across consumer wallets and advertising budgets.

Platforms optimize CPM yield via contextual ad targeting, dynamic insertion, and frequency capping. Over time, hybrid models create upgrade ladders, free sampling entices new users, who can later convert to ad-light or premium plans. To execute this strategy, services require sophisticated inventory management and real-time bidding integrations, capabilities that now differentiate market leaders from smaller challengers.

Note: Segment shares of all individual segments available upon report purchase

By Device Type: Smart Televisions Anchor Household Viewing

Smart televisions accounted for 39.86% share of United States OTT market in 2025 device-based viewing and are forecast to grow at a 12.93% CAGR. Larger screens and lean-back ergonomics extend average session length, raising ad impressions and elevating CPMs. Connected-TV advertising generated USD 15 billion in U.S. revenue in 2025 and is climbing faster than any other digital video segment. Mobile devices still dominate discovery, with teens watching trailers on smartphones before casting to television screens. Game consoles and dongles remain relevant as aggregation layers but concede share as next-generation television operating systems embed the same functionality.

Interface design increasingly features horizontal navigation, user-profile switching, and voice queries. Platforms also roll out low-bandwidth modes that maintain picture quality on legacy panels, supporting rural adoption. The coexistence of cast-enabled mobile discovery and television playback cements streaming as a whole-home experience, making smart-TV optimization a strategic imperative.

By Content Genre: Live Sports Drive Premium Retention

Entertainment titles maintained 48.68% share in 2025, but sports streaming is climbing at a 13.26% CAGR in the United States OTT market. YouTube TV spent an estimated USD 2 billion annually to secure National Football League Sunday Ticket beginning in 2025. Peacock’s exclusive National Football League Wild Card broadcast drew 20 million streamers, demonstrating live sports’ pull in subscription decisions. Rights fragmentation compels fans to manage multiple subscriptions, lifting ARPU yet risking fatigue.

Documentaries, news, and reality formats provide year-round engagement. CNN rolled out CNN All Access at USD 6.99 per month in 2025, targeting viewers willing to pay for ad-free journalism. Faith-based and multicultural catalogs broaden addressable segments inexpensively, as licensing costs are modest compared with big-budget series. Diversified genre slates buffer platforms against seasonal lulls and shifts in viewer moods.

Note: Segment shares of all individual segments available upon report purchase

By Age Group: Gen Z Sets the Pace

Millennials aged 18-34 generated 37.13% of 2025 viewing hours. However, the under-18 cohort is expanding fastest at a 14.21% CAGR, propelled by Gen Z affinity for short-form and creator-driven content in the United States OTT market. A survey by Piper Sandler in 2025 showed 60% of teens prefer free ad-supported streaming over paid subscriptions. Platforms integrate social sharing, co-watch rooms, and interactive polls to attract this segment.

Households aged 35-54 hold higher disposable incomes and maintain three or more subscriptions on average. Adults over 55 adopted streaming at an 88% penetration rate in 2025, gravitating to smart-TV interfaces and bundled services like Amazon Prime Video that include shipping benefits. Tailored onboarding flows with larger fonts and simplified navigation mitigate churn in this demographic.

Geography Analysis

Geography Analysis

Infrastructure disparities dictate regional growth potential. Gigabit fiber blankets coastal metros and Sunbelt growth centers, enabling 4K streams and interactive sports overlays. Rural areas still face limited bandwidth, constraining resolution and the number of simultaneous streams, though targeted grants are narrowing this divide. Digital divide reduction efforts added 6 million newly addressable homes to the streaming universe in 2025.

State subsidies reshape production footprints. Georgia’s 30% tax credit attracted USD 4 billion in filming spend during 2025.^{[3]Georgia Department of Economic Development, “Georgia Film Tax Credit Overview,” georgia.org} New York’s matching incentive preserved its status as an East-Coast hub, while California raised its credit to 25% to stem outflows. Content houses follow subsidy dollars, building soundstages and post-production suites near these hubs, which in turn localizes job creation and ancillary spending in the United States OTT market.

Demographics also vary. Miami, Houston, and Los Angeles host large Hispanic communities, driving up demand for bilingual catalogs and Spanish-language UIs. Services catering specifically to African American and Asian American audiences gained traction in Atlanta and San Francisco, respectively, signaling that regional and cultural tastes increasingly influence catalog decisions. Early sustainability regulations emerged in California and several northeastern states, prompting platforms to locate new data centers in renewable-energy zones.