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The Online Video Market will Reach $37B by 2017

According to the latest market study by Informa Telecoms & Media, the global online video market will reach $37 billion in 2017 -- driven by the growing popularity of over-the-top (OTT) services, such as Netflix and YouTube.

This growth is made up of the three key video revenue streams of advertising, subscriptions and transactions. Informa says that while the online video market has matured in 2012, advertising will continue to be a larger revenue generator than paid subscriptions in 2017.

In the near-term, online video remains a small, but growing, proportion of total video entertainment revenues. Moreover, Informa estimates that it will only account for 8 percent of revenues by 2017.

By the end of the decade, if current growth rates continue, it will account for over 10 percent of revenues. However, its value in the market today is spread among a relatively small group of industry leaders.

"It's clear that online video, today, is worth much more than the digital cents and dimes of yore, and is attracting real, and growing, revenues. But this value is concentrated around a select few players," said Giles Cottle, principal analyst at Informa Telecoms & Media.

Informa estimates that Apple, Google, Netflix and the global TV broadcasters (including Hulu), combined, account for about 70 percent of all online video revenue today. So, if you aren't one of these players, then the chances are you aren't making a great deal of income from online video delivery today.

As well as a growth in online video consumption, revenues will be driven by publishers and operators monetizing more content on devices beyond the PC platform -- such as media tablets and connected or smart TV sets.

From an advertising point of view, live online video content, which is not being monetized today by most service providers, will also drive growth in the market. And, the traditional pay-TV operators will also have a potential role to play.

"The big change to the OTT revenue mix will come when operators start to offer not just low-cost online services, like Sky's Now TV, but stand-alone online versions of their services that come close, in terms of content availability and price, to their core pay-TV services today. Even very modest take-up of these services will completely distort the online video market," says Cottle.

The current U.S. dominance of the global market will wane over the next five years, but America will still contribute over half of all revenues in 2017.

Today, the U.S. market accounts for approx 75 percent of all revenues, but that will drop to less than 60 percent in 2017 -- as Europe and Asia grow more quickly. That being said, advertising will likely be the primary business model and the largest revenue stream in 2017, as it is in 2012.

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