Worldwide revenues from over-the-top (OTT) video services like Netflix and Hulu passed US$ 8bn in 2012, thanks to strong growth in the three largest markets of North America, Europe and Asia-Pacific, according to ABI Research.
These three markets all experienced year-on-year revenue growth in excess of 50%, and the continued spread of connected CE devices (particularly mobile devices like tablets) is expected to push the market past US$ 20bn by 2015.
Michael Inouye, senior analyst at ABI Research, said: “The shift to digital and OTT distribution is accelerating, particularly as content providers increasingly warm up to these channels.
“While pay-TV services are still afforded many advantages we are 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.”
The research firm predicts that the revenue mix for different business models will continue to shift, with subscription-based services like Netflix seeing their revenue share fall from 58% in 2012 to less than 32% by 2018, for example.
In large part this will be driven by a continual shift in consumer demand towards newer forms of digital content distribution, which in turn will redistribute wealth within the value chain, says ABI Research.