A major new report from Informa Telecoms & Media (publisher of IP&TV News) has found that over-the-top (OTT) video will be worth more than US$37bn globally in 2017 – a big figure no doubt, but put into perspective by predictions that this will still be less than 10% of total video revenues.
Over the course of the forecast period, there will be a major shift in the geographical split of OTT revenues, but less of a shift in the business-model mix. The US accounts for over 75% of revenues today, but that will drop to less than 60% in 2017 as Europe and Asia grow more quickly.
In 2017, the split among advertising, subscriptions and transactions will be similar to the splits in 2012, with subscriptions growing slightly at the expense of the other two formats, but still outshone by advertising, highlighting the market’s “continued immaturity”, says Informa.
In terms of share, advertising actually peaks in 2015, at 55% of all revenue, before dropping sharply in 2017 to 50%. Informa expects that, beyond 2017, the revenue mix will adjust to something similar to what we see with TV today, with advertising and subscriptions taking similar amounts of revenue on a global scale.
From an advertising perspective, two of the most crucial things that service providers must get right over the next five years are monetizing content on devices beyond the PC, and monetizing live content, says Giles Cottle, Principal Analyst at Informa, who adds that not doing so will have “serious revenue implications”.
The growth of OTT subscription revenues is believed to be hugely dependent on traditional TV operators – specifically on whether they launch their own stand-alone OTT services and how they react to other services in the market.