Rise and Expansion of New OTT Markets
According to multiple studies and reports, digital growth is expected add more than a billion middle-tier consumers for telecom companies in new markets. This is going to create more space for video and audio streaming platform to expand into new markets. These OTT services include voice, video and audio content, video calling, and messaging services.
In the past, most of these areas were mostly dominated by voice-based services by telecom companies. Currently, products like WhatsApp, Apple Facetime, and Google Hangouts provide an innovative and user-friendly video/ audio streaming platform for consumers. This guide explores the rise and expansion of new OTT markets across the world, as new technologies keep getting added.
OTT Market Segmentation
The OTT market is divided into multiple segments, including the following:
- Components: This segment is broken into solution and services.
- Device: These audio/ online video streaming services are also segmented in terms of devices, with the most popular options being smartphones, laptops-desktops-tablets, smart TVs, set-top boxes, and gaming consoles.
- Content: The different types of content, the technologies are segmented across include audio/VoIP, video, communication, and games, among others.
- Revenue: It is also segmented based on advertisement, subscription, hybrid, and even other types.
Some of the other segments include user type, end-user, and region. Some of the biggest players in the OTT market include Netflix, Amazon Web Services, Google, Hulu, Facebook, Apple, Rakuten, Tencent, Microsoft, and Telstra.
Global Growth & Expansion
According to a report by Allied Market Research, the global Over The Top (OTT) market is expected to grow from $97.43 billion to $332.52 billion between 2017 and 2025. This is an expected CAGR growth of 16.7%. The advances in OTT technology, increase in the variety of contents, and the growth in demand for live streaming channels have triggered the growing demand for OTT and SVoD in developing countries. The lack of data network infrastructure may seem to hamper market expansion in these regions, but the faster adoption of 4G and 5G networks is expected to contribute to its fastest growth.
The Asia-Pacific region is expected to undergo the fastest growth at 20.8% CAGR. The main reason is that the telecom providers here now offer OTT services bundled into their data plans. However, the North American market is still expected to hold the major share into the near future.
While the solution segment currently holds the larger share, it is the services segment that is expected to grow faster at 18.3% CAGR up to 2025. Currently, the solution segment has a three-fifth market share. This has been the case because of the growth in demand for innovative OTT solutions for media sharing.
In terms of device-type segmentation, the smartphones segment dominated the video/ audio streaming platform in 2017. It is also expected to continue to dominate into 2025. It accounted for a third of total revenues in 2017. This segment is set to continue growing at the fastest rate of 20% CAGR because of increased use of smartphones for streaming OTT services and the growth in demand for phones with larger screens in the developing world.
Video Content Growth
In terms of content type, the video segment is found to set the standard for others to follow. It is expected to record the fastest growth at 18.3% CAGR. This is because of the release of new technologies that will help in increased consumption of video. In 2017, video had the largest segment share at a third of the overall market. The other segments include audio streaming platform/VoIP, communication, games, and others.
Online Video Platform Market
The online video platform market is expected to grow to $915 million by 2025. The factors contributing to this growth include the following:
- Growth in the use of online video platforms in entertainment and media
- Growth in online video advertising
- Increase in mobile phone data connection
- Increased investment in online video creation because of growing popularity
The same report also projects the video analytics market to grow to $14.44 billion by the same year. This segment is expected to grow at the fastest pace in the Asia-Pacific region. The contributing reasons include the following:
- Increased internet penetration
- Faster economic growth in developing countries
- Increase in use of video cameras for security and surveillance
Global OTT Content Market & Information & Communication Technologies
The global Information and Communication Technologies (ICT) sector has undergone some major changes in the last few years. It is specifically getting stimulus from governments of different economies creating and implementing inclusive and smart regulations for governing and facilitating technology connectivity. As the tech world prepares for dramatic changes with huge advancements backed by machine intelligence, there are many changes taking place in the global ICT environment.
Some of these notable changes driving the rise and expansion of new OTT online video streaming services are as follows:
i. Mobile – New Internet Accessibility Driver
Today, almost 75% of Internet usage relies on the mobile devices segment. Most of the growth in this segment is seen in countries with low and middle-income population.
It is still worth noting that almost 50% of the global population doesn’t have access to mobile broadband internet services. Interestingly, mobile data service providers worldwide have taken up with the challenge. They are focused on targeting all such markets with low penetration to provide high-speed connectivity to grow their customer base.
ii. Mobile Content Consumption Keeps Growing
Mobile is expected to continue experiencing continued growth in terms of content consumption. Reports show that it is almost at the same level as TV. Some of the challenges faced by the content providers to grow mobile consumption include:
- Providing richer content
- Keep up with the demand for evolving UX
- Keeping consumers engaged
- Optimize customer lifetime value
According to a report, the average household has many more options than ever before.
- More and more millennials are switching from TV to mobile SVoD
- Baby boomers are also fast switching to OTT services
As 5G services are expected to grow in their reach, the speed at which high-quality online video streaming services can be served will also benefit service providers.
Another significant development in this domain is the increased proliferation of mobile apps. Mobile is expected to be at the heart of this revolution. The ever-increasing number of start-up, providing a world of new apps, is expected to bring a revolution in the global OTT expansion.
iii. Cloud Computing to Grow
Another important trend that is expected to drive the expansion of new OTT markets is the increased adoption of Cloud computing. The Cloud is one of the most important factors in the transformation and facilitation of different technologies in the current era. It is facilitating how ICT providers seek to deploy new systems and tools and enterprises are handling big data to gather relevant information and affect multi-sector business growth.
iv. More New Partnerships
Every new year is expected to bring about new competing streaming services entering the OTT marketplace. A major trend is going to be the creation of strategic partnerships among content creators. Some of the examples are as follows:
- 7TV is going to get revamped in Germany, as Discovery Communications and ProSiebenSat.1 create a new partnership to grow their subscription base to 10 million within the first 2 years. The partnership will offer a combination of global and local content and will aim at competing with major global players.
- There is also some action taking place in the UK as BBC, ITV, and Channel 4 are expected to form a partnership. This will lead to the creation of a new British OTT video/ audio streaming platform. It is also focused on providing the market with more local TV content.
- 7Sports and eSports.com entered into a partnership recently to create and present new content on each other’s platforms. For example, eSports will be able to show highlights videos and 7Sports can create its own eSports leagues and tournaments.
These partnerships are expected allow consumers to access richer and more personalized experience.
See Also: 11 Audio/Video Streaming Trends for 2020
v. Faster Integration of Technologies & Networks
ICT is expected to keep disrupting industries into the future. There will be an increased shift towards cross-functional platforms that can help integrate:
New services are being created because of the well-organized integration of communication protocols and applications.
vi. Diversification in Streaming Services
The emergence of an increasing number of major OTT players is expected to keep changing the scenario in multiple ways. The most important of these developments is going to be the diversification in streaming services. For example, WarnerMedia’s new OTT platform has 3 unique versions.
Until this time, most OTT online video streaming services have created a single variety of service. They didn’t create different bundles or packages like conventional satellite and cable service providers. For example, when a user subscribes to Netflix, the different varieties exist only in terms of streaming quality and access.
In the example quoted above related to WarnerMedia, it will be offering multi-level services:
- Entry Level: This service will be for subscribers who are interested only in movies.
- Premium Level: This will target subscribers focused on original programming.
- Comprehensive Level: This will cover all the other levels and provide a wider range of content library.
Such diversification is created with the goals of tempting most subscribers to sign for entry-level service and then encouraging them to upgrade.
vii. Virtual MVPD to Grow Fast
Virtual MVPD or vMVPD is a service that allows multiple TV channels through OTT. Examples of such online video streaming services include YouTube TV, Hulu Live TV, and DirecTV Now. In 2018, the vMVPD subscription base increased from 4 million to 7.5 million by the end of the year. It is expected that it will continue to grow at a faster rate in the future.
Even conventional MVPDs, such as DirecTV and Dish TV have begun offering their own virtual products. Their product portfolios are also planned to grow. An increasing number of vMVPDs are entering into partnerships with local sports and TV networks. This is expected to blur the lines across OTT services. Users are expected to choose whichever service offers them the best content at the most competitive prices. This is going to be the scenario as the technology barrier is expected to be overcome.
viii. Ad-based OTT to Grow
It is expected that ad-based OTT services will continue growing at a fast pace. This is despite the fact that new SVoD services will be launched at the same time. Examples of ad-based OTT services include vMVPDs, ad-supported OTT service from NBCU, or services like Roku and Hulu.
According to a study, 73% of OTT viewers claim that they follow ad-supported OTT. 45% claimed that they spend most of their time watching ad-supported OTT compared to SVoD content. Some of the factors facilitating advertisers to benefit from such OTT include:
- A younger audience that can afford such services
- Better abilities for targeting and tracking ads
At the same time, this area of the advertising industry is still in its early phase and much smaller compared to other models. The market strongly supports the ad-supported OTT market to keep evolving and growing. The ad-free SVoD segment continues to have increased competition and as consumers get too many options and subscriptions, ad-supported OTT segment is expected to keep growing at a fast pace.
As the competition grows in the OTT marketplace, globalization will play a bigger role for providers seeking to grow their market. The global online streaming service subscriptions have seen a jump from 150 million to 600 million from 2014 to 2019. This figure is expected to reach over 1.1 billion in 2021. The US video/ audio streaming platform penetration stands at 70%. The average user subscribes to around 3.4 streaming video services. The total number of streaming service providers in the world coms to around 300, with two-thirds of them catering to the US market. Even when the developing countries are contributing the biggest to the growth, the developed world continues to have the largest market share.