Over-the-Top (OTT) video revenue exceeded $8 billion in 2012, with that for the three largest markets – North America, Europe and Asia-Pacific – all growing at rates of more than 50%, according to a new report from ABI Research. ABI expects OTT revenue to exceed $20 billion by 2015, fueled by the ongoing spread of connected CE and increasingly mobile devices, such as tablets.
“The shift to digital and OTT distribution is accelerating, particularly as content providers increasingly warm up to these channels,” senior analyst Michael Inouye was quoted in a press release.
“While Pay-TV services are still afforded many advantages we are approaching the proverbial fork in the road when content owners will decide if they continue down the same path or forge ahead, shaking up the primary means of media distribution as we’ve known it.”
Subscription OTT models, such as that of Netflix, play a larger role in North America than they do in Europe or Asia-Pacific, indicative of how the dynamics of revenue generation vary by region and continue to change.
ABI expects a more even distribution of revenue across business models given “a continual shift in consumer demand towards newer forms of digital content distribution, however. Subscription services accounted for 58% of worldwide OTT video revenue in 2012. This will decline to 32% by 2018, ABI forecasts in its OTT and Multi-screen Services Research Service.
“While we still see great value and strength in the Pay-TV sector we are also starting to see the pieces that will accelerate change fall into place,” ABI practice director Sam Rosen elaborated. “Whether it’s Netflix expanding to international markets or ABC and CBS enhancing catch-up services the building blocks that will restructure the how, when, and where consumers view content are starting to give shape to a new media future.
“This future, however, isn’t devoid of traditional media nor is it a matter of new channels necessarily winning, but rather a redistribution of wealth within the value chain.”