Service revenues in the OTT market will grow at an average rate of 32% through 2016, reaching $16.4 billion, according to new research.
IMS Research further said the over-the-top video market is no longer about the volume of transactions as most companies offering OTT content are motivated to explore new strategic paradigms to monetize their services, which will drive service revenues in the world through 2016.
OTT subscriptions, such as ones offered by Netflix Watch Instantly and Hulu Plus, are forecast by IMS Research to account for the majority share of world OTT service revenues over the next five years and are estimated at $1.9 billion in 2010.
Pay-per-view transaction revenues are expected to grow at a faster pace though, as many more retailers enter the OTT market with digital rental and purchase services in an effort to recoup declining revenues from physical media sales.
“Netflix’s recently announced expansion into Spain and throughout Latin America illustrates the type of strategic initiatives we can expect from leading local OTT service providers as they aim to expand their serviceable market. New deals for Spanish and Portuguese language content create a potential for Netflix to expand its market reach to the vast population of the whole Latin American region, as well as millions of Spanish speakers living in the US,” said Anna Hunt, CE principal analyst at IMS Research.
Low monthly prices and all-you-can-eat subscriptions are common OTT offerings, thus methods of expanding the customer base are very important for providers. No-one has yet found the magic formula for monetizing free OTT services, and market leaders such as Google, Yahoo! and Microsoft are eager to convert millions of their free OTT viewers into paying customers.