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OTT market sees 32% CAGR through 2016

Posted: 12 Jul 2011 ?? ?Print Version ?Bookmark and Share

Keywords:over-the-top? video market? OTT subscriptions?

The over-the-top (OTT) video market is no longer about the volume of transactions. OOT content providers are exploring new strategies to enhance their services. These strategies are seen to drive the service revenues of the world OTT market at CAGR of 32 percent through 2016. By then, OTT revenues will reach $16.4 billion, according to IMS Research's new report "Over-the-Top VideoService Delivery & Business Models2011 edition."

IMS Research believes that the majority share of OTT subscriptions over the next five years will be the ones offered by Netflix Watch Instantly and Hulu Plus. More retailers are entering the OTT market with added services, such as digital rental and purchase services, to make up for declining revenues from physical media sales. Because of this, pay-per-view transaction revenues are expected to grow at a faster pace.

Global OTT market
Although IMS Research is now predicting steady growth for the OTT market, the research firm previously predicted shipments for OTT devices will stagnate in 2011 and 2012. Read the article here.

Anna Hunt, CE principal analyst at IMS Research, said, "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."

OTT subscriptions usually offer low monthly prices and multiple-services and providers are looking for methods to expanding their customer base.

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. Hunt commented, "Potential acquisition of Hulu is exciting news for these companies. Mergers with and sales of successful OTT services are going to become more common as Internet giants and large retailers seek to establish a global pay-OTT presence and compete with the likes of Netflix. We're already seeing some of this with Amazon's LOVEFiLM acquisition and the recent move by UK's Tesco to acquire Blinkbox." IMS Research projects that retailers will grow their share of the OTT market, accounting for 13 percent of world OTT service revenues in 2016.

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