Over The Top supply of content direct to TV sets is creating “a plethora of business models” says a new report from IMS Research. “OTT subscription services will generate a cumulative $32 billion in revenues over the next five years, accounting for the majority of the market each year when compared to pay-per services that enable users to rent or purchase videos on an ad-hoc basis.,” says the study.
IMS suggests that while advertising-funded services and free videos make up an overwhelming share of online video traffic today, and this won’t change dramatically over the next five years. “But we will start to see some significant growth in pay-OTT transactions and revenues as more market leaders in pay-TV, media and CE invest in exploring strategies for effective OTT video service delivery.”
Anna Hunt, the report’s author, says that homes viewing only free OTT videos accounted for 77% share of the total OTT market at the end of 2010, and this will decline to 69% by the end of 2016. Nevertheless, OTT market revenues are forecast to grow by a compounded annual growth rate of 32% over the next five years. Hunt states: “Some of the main drivers behind OTT revenue growth are service providers and content providers’ willingness to explore new paradigms. Support for multiple devices and platforms, widespread partnerships and acquisitions, and global expansion of successful services are some of the vital factors that will shape the market through the end of the decade.”