Connected TV services to hit €2.5bn by 2016

A new report from French firm IDATE predicts that the global market of services on Internet-connected TVs will reach €2.5bn in 2016, with growth expected to accelerate strongly from 2015, though at the expense of the existing pay-TV industry.

To put these figures in context however, the research firm adds that by 2016, connected TV services will represent 16.8% of the total over-the-top (OTT) video market and only about 1% of the worldwide fixed video services market.

The worldwide television sector is described as facing a profound restructuring, as players from formerly disparate sectors, such as TV, Internet and equipment vendors converge on the market.

Jacques Bajon, Head of IDATE’s Video Distribution Division, said: “The most influential element comes from the popularity of OTT products in the US, whether Netflix with its 22 million streaming customers in Q1 2012 (up 9% from Q4 2011 and generating revenue of $500 million during the quarter) or Hulu which regularly reports more than 1.5 billion ad views a month for its streamed videos, while its Hulu Plus paid offer had a base of two million subscribers in Q1 2012, which is 33% more than in Q4 2011.”

He goes on to say that, “there is nothing comparable as yet in Europe. The early days of CanalPlay Infinity, for instance, appear quite tepid in France, attracting only 25,000 paid customers in Q1 2012, while American players’ weight in the global OTT market is increasing and, by extension, in the connected TV market as well”.

IDATE’s overall analysis of the deployment of connected TV services concludes that the right conditions for rolling out new services were not yet entirely there in early 2012, and the research firm does not expect to see the market really take off until 2015.

Paid services will play a leading role in the development of connected TV services, according to Mr. Bajon, who adds that paid services will represent 59% of the market for video services on connected TV in three years’ time.

Advertising revenues on connected TV services are expected to be primarily derived from the operation of premium programs, while the consumption of short programmes and of user-generated content is likely to remain largely limited to PCs, smartphones and tablets.

IDATE expects the US to remain the largest market for connected TV services through 2015, accounting for up to 61% of the worldwide market. This growth is however anticipated to have negative consequences for the established TV industry, as competition from OTT services forces down subscription fees.

In general however, the research firms predicts that there will be overall growth in the global TV market at current currency values, but probably a decrease in real terms.

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