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OTT video ads market to reach US$ 13bn by 2017

Ad-funded short-form content continues to make up the overwhelming majority of the worldwide over-the-top (OTT) video market, with 693bn ad-funded video streams delivered in 2011, according to US firm IMS Research.

There is however some movement expected here: OTT revenues are expected to be driven by premium long-form content over the next five years, with advertising revenues forecast to increase to US$ 13.4bn by 2017, compared to US$ 20.6bn generated from pay-per-view and subscription OTT video services.

Anna Hunt, author of the study and principal analyst at IMS Research, comments, “Growth in revenues from in-video OTT advertising will be mainly driven by the growth of OTT video consumption, especially as streaming of short-form content via tablets and PCs becomes even more popular.

“Companies such as Google and AOL will have a significant share of these revenues, as they implement tactics such as forming new strategic relationships to monetize original video assets, directly approaching ad buyers, and offering guarantees for audience delivery.”

Although most companies are not believed large enough to sustain their business solely on OTT advertising revenues (with the exception of widely-popular portals such as YouTube), advertising is and will continue to be an effective method of monetizing OTT video, according to the report.

IMS Research forecasts that the rate of growth in OTT advertising revenues will become stronger over the next five years. Hunt adds: “It will take some time before media companies start to benefit from higher OTT video adoption rates and more sophisticated OTT advertising campaigns.

“For now, companies solely dedicated to OTT video distribution are typically structured around a pay business model, or a mix of advertising and models, while larger media companies, broadcasters and channel networks do not have to rely solely on ad revenues from OTT platforms, and therefore are not as affected by the challenges of sustaining a business solely on OTT ads.”

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