Research: OTT will need ‘trial and error’

Identifying the successful “new services,” licensing models, and associated “business models” will require continual trial and error, with no certainty of success says In-Stat.

“The decline of retail video disc sales, coupled with on-demand viewing of TV content and the threat of video cord cutting, points to enormous changes ahead for the video entertainment industry,” says Keith Nissen, Industry Analyst.  “As new business models emerge, there will be winners and losers, with billions of dollars at stake.  Our research identifies the potential revenue impact to players throughout the video value-chain, based on very realistic scenarios.”

Some of the research findings include:
– Pay-TV operators generated $93 billion in 2009 but as TV viewing becomes more splintered and TV monthly rates rise, TV operators run the risk of cord cutting.
– Premium channels (HBO, Showtime, etc.) are in competition with online video subscription services for both subscriber spending, as well as movie licensing rights.
– Broadcast TV advertising revenue is slowly declining as eyeballs shift from pay-TV to online content.
– Retail video disc sales are expected to drop $4.6 billion from 2009 to 2014.
– The emergence of electronic sell-through for online video purchases and rentals will transform the digital entertainment industry over the next five years.
– Online VOD (Video-on-Demand) subscription revenue is expected to approach $3.5 billion by 2014.

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