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Report: Bright Future for OTT, Digital Video

11 Jun, 2014 By: Doug McPherson

NEW YORK – PricewaterhouseCoopers (PwC) predicts that, in four years, over-the-top TV streaming will be a $10.1 billion segment, up from just $3.3 billion last year.

In its report, “Global Entertainment and Media Outlook,” PwC says home video, mainly driven by subscription video-on-demand purveyors like Netflix, HuluPlus and Amazon Prime and others, will take in more than $17 billion by 2018, up from $7.3 billion in 2013.

Forty percent of total advertising growth in the U.S. will come from digital. Domestically, digital spending will account for 45 percent of the total growth in the entertainment and media categories by 2018, up from 33 percent now.

Globally, spending on digital entertainment and media will account for almost two out of every three dollars spent in that space by 2018.

Marcel Fenez, PwC’s global leader, entertainment and media, says the “bedrock of a strategy fit for the digital age is the digital mindset,” and that companies must exhibit three behaviors: “… forging trust with consumers; creating the confidence to move with speed and agility; and empowering innovation. This will be an important step in monetizing the digital consumer.”

Insiders say that altogether, things look good for video advertising. Last year, it was a $2.8 billion business, but in 2018, PwC says that number will nearly triple to $6.8 billion.

Other findings in the report include:

  • Internet TV advertising will double its share of total TV ad revenue in the next five years. Internet TV advertising revenue from traditional broadcasters will increase from $3.7 billion in 2013 to $9.7 billion in 2018, and more than double its share of total TV advertising from 2.2 percent in 2013 to 4.5 percent in 2018. Traditional broadcasters still dominate and are adapting to the Internet video opportunity, creating a significant new revenue stream despite competition from Internet rivals.
  • Mobile advertising will overtake classified Internet advertising in 2014. Global mobile Internet advertising revenue is forecast to leapfrog classified Internet advertising to become the third-largest Internet advertising channel with revenues of $18.9 billion in 2014.
  • Digital out-of-home (DOOH) advertising revenue will see significant growth in fast-growth markets. DOOH advertising is driving overall OOH advertising growth globally at a compound annual growth rate (CAGR) of 16.2 percent.
  • Subscription TV will not be daunted by the rise of OTT as it grows across global markets. Global subscription TV revenues (excluding license fees) will grow at a CAGR of 3.5 percent over the next five years to $236 billion in 2018. This growth demonstrates that subscription TV is in a healthy position, assisted by the initiatives it has implemented to counter the impact of OTT and other disruptive influences.

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