Facebook, Apple, Amazon, Netflix and Google (FAANG) are set to account for 63 per cent of global OTT subscription revenue in 2019, a total that will largely hold steady through 2023, when these companies will represent 60 per cent of the market, according to the World Information Series–Service Provider (WIS-SP) service from Ovum.
Moreover, FAANG video services, predominantly Google’s YouTube and Facebook Video, will account for 43 per cent of advertisement-based Vod services in 2023, up from 39 per cent in 2019.
“FAANGs include the most innovative, disruptive and largest companies ever to compete in entertainment distribution,” said Ed Barton, chief analyst of Ovum’s Consumer and Entertainment team. “These companies have built dominant positions in the key growth segments of video distribution: OTT subscriptions and advertising. This situation is making life very hard for competing video services seeking to gain a foothold.”
Studio giants and broadcasters are launching a slew of significant OTT video services heading into 2020, including Disney, Warner Bros., NBC, ITV and Discovery. The next five years will see unprecedented competition with huge investments in OTT video technology, original and exclusive content and subscriber acquisition promotions. These promotions include Verizon’s offer of 12 months of free Disney+ to around 50 million US mobile subscribers.
This is likely to accelerate declines in traditional pay-TV while making life unbearable for smaller video platforms that either cannot or will not sustain multi-year losses in order to survive. PlayStation’s Vue has announced it will close in January 2020 after failing to find a buyer, and failing to top 1 million subscribers in its four-year lifespan. Meanwhile, Walmart is seeking buyers for its transactional video service, Vudu.
“The FAANGs are feasting while entertainment giants prepare to lose billions of dollars establishing direct-to-consumer video platforms,” Barton said. “The entire OTT video industry is likely to be loss-making until the mid-2020s. The companies left standing in 2025 will have the opportunity to fashion the long-term future of visual entertainment distribution, but they will have paid a very high price.”