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OTT Video Market Will Hit $20B by 2015

17 Apr, 2013 By: Doug McPherson

SCOTTSDALE, Ariz. – The over-the-top video market was worth $8 billion in 2012 and by 2015 that number will reach $20 billion because of the continued spread of connected consumer electronic devices, says ABI Research.

The three largest markets – North America, Europe and Asia-Pacific – all saw year-over-year growth beyond 50 percent in 2012. ABI credits such companies as Netflix, Hulu, Apple and Amazon for sharp growth.

Michael Inouye, an ABI analyst, says as content providers continue to warm up to digital and OTT channels, growth will continue to rocket. “While pay-TV services are still afforded many advantages, we’re 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,” Inouye says in an ABI Research press release.

ABI says the dynamics around revenue generation continue to change and currently vary by region (e.g., subscriptions more significant in North America than Europe or Asia-Pacific). “We expect a greater diffusion of revenue across the various business models,” Inouye adds.

For example, in 2012, 58 percent of OTT video revenue came from subscription services, but ABI anticipates this share to fall to less than 32 percent by 2018. In large part, ABI says this is driven by a continual shift in consumer demand toward newer forms of digital content distribution.

“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,” says Sam Rosen, ABI practice director. “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.”

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