Digital video & OTT media overview 2016 by Better Software Group

Anyone who tracked digital media market in recent years confirms that sector facing significant changes. Market still evolves. Media companies and brands double or even triple-up their efforts to hit with their content to digitally aware consumers. You can easily notice business model, market structur variations.

What factors really determine the status of the marketplace? All analysts agree – consumer consumption of digital media and technology is core to understanding market trends. Today’s user purchasing or simply wondering decision is certainly getting more complex. BuzzStream & Fractl survey revealed that Baby Boomers (52+ years old) spend more time each week with digital content than Millennials (21-39 years old) or Generation X (40-51 years old). Baby Boomers still comprise more than half of newspaper audiences. Millennials get their news through a digital publications and primarily social media channels.

There are some pivotal determinants. Firstly, video is the king. Secondly, audiovisual and video media content is  distributed straightway over the Internet. Digital videos are provided by developers, producers in the form of  applications downloads or video streaming. All these demographic groups invest more and more time in video content and dedicated platforms consumption.

Video market general outlook

The market’s most profitable segment is still “Video Games” with a volume of 52,45 $ in 2016. Category which records the largest yearly growth is video, VOD (Video on Demand) and OTT (Over the Top) services. According to the PWC market research, some of the hottest-selling gifts in the holiday season of 2015 were streaming video devices and smartphones. Furtheremore, the expansion of digital technology, revealed in fixed and wireless network connectivity enabling growing numbers of connected devices driving new channels to produce, distribute, and monetize content. Content producers and developers have more opportunities outside traditional distribution channels. On the other side, digital shoppers have far more content to choose from. Video content is available at any time, in any mix, through delivery options and devices: TV set, laptop, smartphone, tablet.  As Business Wire reports, the video content market is anticipated to grow over $4.4 billion in 2022 in the forecast period from 2016-2022. Video  streaming is growing progressively and been adopted for watching live  and on-demand videos, live broadcasts, commercial advertisements. Technology expansion have encouraged organizations to adopt video streaming solutions and launch innovative products.

Video, OTT services market

As media evolves to a direct-to-consumer world, nowhere is the competition fiercer than in television. Video commands the most revenue of any E&M (Entertainment & MMedia) sector: about US$420 billion globally in subscriptions and advertising in 2015 (PWC market research). More and more people globally are choosing to stream video through over-the-top (OTT) services and television content via the Internet. Without the need for traditional cable or satellite TV subscriptions. The rise of over-the-top (OTT) video services has reshaped consumer habits and the competitive landscape for the video industry. OTT content is delivered over the internet. Does not require a traditional broadcast or cable video infrastructur. OTT video subscriptions represent a new business model. Modern IP-based technology allows to interact directly– anywhere, anytime, any device.

Video OTT landscape

OTT selected players; Source: Business Insider

Over-The-Top content (OTT) is the delivery of audio, video, and other media over the Internet without the involvement of a multiple-system operator in the control or distribution of the content. Consumers can access OTT content through Internet-connected devices such as: laptops, gaming consoles (PlayStation 4, Wii U, Xbox One), set-top boxes (Roku, Apple TV, NVidia Shield), smartphones (Android, Apple, Windows devices), smart TVs (Google TV, LG Electronic’s Channel Plus, Sony, Samsung) and tablets.

OTT video services market is really hot and promising. Hulu rannounced in Q2 2016 growth rate of more than 30% year-over-year, is now near 12 mln paid subscribers. Netflix has in excess of 75 million subscribers, is available in almost 200 countries. Amazon has almost 50 million prime members. OTT delivery brings new third-party monetization opportunities that broadcasters may want to take advantage of in the coming years. For example Apple iOS and Google Android offer integrated ad platforms that may be leveraged for certain new services (Ericsson report).

According to Unisphere Research „The OTT-Video Service Market” OTT customers watched on-demand content and catch-up services on their laptops, which gave way to streaming set-top boxes (STBs) and internet streaming “sticks,” which in turn gave way to higher numbers of consumption minutes for smartphones and tablets. In addition, content in 4K (UltraHD or UltraHD Premium) is becoming mainstream. Even emerging content formats such as Virtual Reality-video show promise.

Traditional video distributors, such as cable, satellite, and telecommunications companies, must weigh a few strategic options.  They have to react to consumer desire for fewer channels, personalization, lower monthly bills. Enterprises are obliged to create more segmented, affordable, and smaller video bundles to maintain pay-TV subscription rates. Main players have to launch OTT services to target those who have never connected to a pay-TV service) and integrate packages of OTT services with broadband access.

As apps drive more mobile consumption growth, including video, the quality of mobile app advertising is improving. PwC forecasts total global internet advertising spend will grow from 135.4 billion $ in 2014 to 239.9 billion $ in 2019. Video is the fastest growing internet advertising segment (value of $15.4 billion in 2019).

OTT market forecats

The global over-the-top video market is predicted for nearly exponential growth, reports a Digital TV Research Limited research. It forecasts that global OTT TV and video revenues will climb to $64.8 billion by 2021. That index includes projected revenues for 100 countries worldwide. The industry took in $29.4 billion in 2015 and $4.5 billion in 2010. The greatest share of total will come from the United States, where revenues will rise from $8.2 billion in 2015 to $22.8 billion in 2021. China will come on strong,  with current revenues to reach $6.2 billion by 2021. According to eMarketer estimates, 191.4 million U.S. Internet users will access the Internet via a connected TV device by 2018. Per eMarketer’s projects, 58.2% of the U.S. population will be accessing the Web through such means by 2018. It goes without saying that a vast majority of activity will be watching video.


Global OTT TV& video revenue forecasts; Source: Digital TV Research

Most online video revenues will come from subscription services (SVOD) through 2018, but Digital TV Research predicts that advertising-supported content (AVOD) will take the lead by 2020. At that time, AVOD revenues of $15.4 billion will surpass SVOD revenues of $14.6 billion. OTT Video Market Tracker service showing OTT video usage in Western Europe is continuing to expand, with 55% of U.K. broadband households and 51% in France watching TV programming and movies online, compared to 70% in the U.S. However, the number of paid subscriptions in Europe is significantly lower, where 30% of broadband households in the U.K. and 17% in France subscribe to OTT video, compared to 64% of U.S. broadband households.


OTT TV& video revenues by source (Marketing& Telecom Consulting)

Better Software Group