#13 M&E Research : SVOD services growing rapidly, OTT video likely to cross USD 10 Billion in 2014
While rising SVOD revenues may not be ringing trouble for traditional Pay-TV yet, subscription video is on rapid upturn. A recent report from Strategy Analytics reveals SVOD services led by Netflix , Hulu and Amazon will make up nearly half of OTT revenues in North America with overall OTT video market likely to cross $10.7 billion in 2014. Meanwhile traditional service providers are losing video subscribers (top 10 pay-television service providers lost 165,500 customers in second quarter of 2014, representing 0.2% of 87 million subscriber base) and limited success of their TV Everywhere services is not helping either.
Over the Top video services is emerging as an alternative to traditional TV services. For consumers OTT makes content consumption more intuitive, interactive, social, economic and seamless. Overall OTT video revenues are expected to double between 2013 and 2019 to staggering USD 18.0 billion. Some of the key highlights of the Strategy Analytics report which excludes Over the top services delivered by traditional players like satellite and cable operators are
- Subscription video-on-demand (SVOD) revenues are expected to grow 26 percent to $5.1 billion, accounting for 48% of total over-the-top (OTT) video revenues.
- Retail sales (downloading to own) will grow 13 percent to $ 1.4 billion (13% of OTT revenue) while renting (streamed/temporary downloads) will grow 21 percent to USD 681 million (6% of revenue).
- Online Advertising around OTT is expected to account for 33% of revenues, growing by 17 percent to USD 3.6 billion. The growth in advertising trend is not surprising as online advertising has been steadily gaining ground in traditional setup. Subscriptions will account for remaining 48% of OTT revenues in 2014.
- An average North American broadband user is expected to spend almost USD 29 on OTT services in 2014, up 18% from 2013. By 2019, this will have increased 78% from 2013 to USD 43.51.
- Between 2013 and 2019, subscription revenues are expected to grow 116 percent to $8.8 billion. Retail sales by 58% to $ 1.9 billion, while renting growing at 74% to $ 980 million.
- OTT video sales currently stands half way to DVD but is expected to surpass it before 2019
- OTT video revenue in Asia-Pacific region which stands at paltry $2.68 billion is projected to reach $10.19 billion by 2019
What is your Perspective?
2. Despite the rising costs Pay television subscriber numbers in US have largely remain resilient, is it expected to change as OTT video providers expand their content services and complete directly with traditional players?
3. Is OTT video creating a desired combination for a disintermediation of traditional TV services with consumers in control ?
Updated : Overall OTT revenues expected to cross USD 10 Billion in 2014