Technology | Media | Telecommunications

Thursday, November 15, 2012

Over-the-Top Video Revenue to Reach $32B by 2017

By 2017, according to the latest market study by ABI Research, over-the-top (OTT) video entertainment service revenue will quadruple to $32 billion -- that's up from the expected $8.2 billion in 2012.

Monthly subscription services, such as Netflix, have led the OTT adoption trend the past couple of years, which has helped push the market towards healthy growth and sustained profit margins.

By 2014, however, ABI Research expects OTT on-demand rentals to surpass subscription revenues. The resulting impact on Cinema revenues is unknown at this time -- but we can anticipate a significant change, when more new releases are combined with the growing catalog of prior movies and documentaries.

"Connected consumer electronics (CE) and mobile devices continue to push consumer behavior towards newer forms of media distribution like OTT and multi-screen services, said Sam Rosen, practice director at ABI Research.

Pay-TV services will continue to thrive, by implementing multi-screen services and supporting OTT content. In the end, ABI expects an amalgamation of video entertainment services that complement each other will be attractive to many people.

In time, video advertising is expected to pick up momentum as ad revenue increasingly shifts to the OTT market. Connected CE and mobile or portable devices in particular present additional consumer touch-points -- enabling more creative ways for people to connect or interact with each other.

These devices are capturing more of our attention as many people claim to multitask while watching TV at home. Finding new ways to better engage them through OTT experiences, therefore, will prove increasingly important as consumers adopt new viewing behaviors.

"While many consumers today claim to use mobile and portable devices while watching TV, most of us are actuality poor at multitasking. In many cases this means consumers are more acutely aware about the content on their portable device than the TV, said Michael Inouye, senior analyst at ABI Research.

While second screen advertising -- on tablets or smartphones -- is not necessarily OTT content, it does highlight the importance of targeting these connected devices that extend the reach of content beyond the traditional TV set.