The ever-increasing penetration of high-speed Internet connectivity, unlimited wireless data plans, and the widespread availability of public Wi-Fi have proven to be the driving force behind the rise in OTT demand in developing countries and the world itself. However, that is not the only reason for the growing demand for online video streaming platform.
This guide explores the key factors contributing to the rise in ITT demand in the developing world and the relevant statistics.
Impact of Mobile Device Penetration
High mobile device penetration is perhaps the most crucial factor contributing to the growth in OTT demand in developing markets. The World Bank reports that mobile device user count is growing at a rate of 30% year on year. There is another factor that has contributed to the growing demand for OTT services – increased adoption of cloud-based services. The technology enables portable services, allowing users to store and access their data from anywhere, on any device, and at any time.
There is increased adoption of OTT market in different applications, including finance, e-commerce, health, education, and others. This is expected to support market growth in the future. The global OTT market report is segmented based on region, content, and device. The different regions include:
- North America
- Asia Pacific
- Latin America
- The Middle East and Africa
While North America leads the regional market in terms of revenues, the Asia Pacific market is expected to grow at the fastest pace in terms of CAGR. The leading players in the global OTT market include Hulu, Netflix, Amazon, Facebook, Google, HBO, and Roku, among others. The platforms have implemented many strategies to reach out to more and new users.
It is not just the improved deployment of broadband networks, but the increased number of smart device ownership that has contributed to the growth in OTT demand in emerging markets. This has led to a dramatic increase in the use of online video streaming platform. The following stats show how fast mobile data traffic was projected to grow (CAGR) between 2014 and 2019 in these markets:
- Asia Pacific: 58%
- Middle East & Africa: 72%
- Latin America: 59%
Mobile video was expected to consume the most traffic in 2019, at 69%.
India – A Major Growth Market
India, the fastest-growing major economy, is at the top of the list of developing market with growing OTT demand. The country currently has more than three dozen OTT service providers that provide online video streaming platform over the Internet. Some of the key statistics related to this market are as follows:
- In 2018, the Indian OTT market was worth $303 million
- In 2019, this market grew to 493 million
- The average time spent on video streaming platforms in India is 20 to 50 minutes
Hotstar is the most popular OTT platform in this market, recording over 150 million active users in 2018. Over 96% of the watch time on this platform involves videos of duration longer than 20 minutes. Netflix, the global market leader, recorded 20 million viewer count in 2018. Yet, it has the highest average watch time in the Indian market.
The list of the top 10 OTT platforms in India includes the following names:
- Sony Liv
- Amazon Prime Video
- Jio TV
- Eros Now
- MX Player
Latin America – Growing Demand for OTT & Video
According to a 2018 report by Business Bureau Book, online TV is watched by over 44 million households in Latin America. This is equivalent to almost 70% of households connected to the Internet. Some of the interesting facts related to the OTT and online video streaming platform segment in this market from several such reports are as follows:
- Latin American households are more comfortable with SVoD services
- 48% of these households were subscribed to Netflix in 2018. The figure was 34% in 2015
- One of the reasons for this fast growth is the late adoption of the Internet in the region
- OTT television and movies is expected to generate $4.60 billion worth of revenue in 2022. This figure was $1.87 billion in 2016.
- SVoD is expected to be the largest source of OTT revenue in 2022, at $2.86 billion
- The number of SVoD subscribers is expected to reach 32.54 million by the year compared to 17.08 million in 2016
- Brazil will contribute 34% of SVoD subscribers in Latina American region in 2022
- Mexico will be the second-largest market with 28% share in SVoD subscription
- Netflix is expected to continue to be the largest streaming platform in the region in 2022, having a market share of almost 50%
Africa & Middle East – Emerging OTT Market
Africa has some of the fastest-growing economies in the world. The technological developments taking place in Africa and the Middle East (AME) have played a significant role in increasing the consumption of OTT video. Besides, data compression and other developments in video streaming are expected to help populations in these regions with less developed infrastructure to access video streaming services.
For example, Simplestream and V-Nova rolled out certain services in 2019 that allowed the masses to watch videos on any network including 2G networks, speeds as low as 1Mbps, and bit rates of just 100 Kbps.
OTT video platforms have, however, faced a tough challenge in many AME countries that have much lower broadband implementation or slower broadband.
- Both mobile and fixed broadband penetration is relatively low in AME countries
- The mobile and fixed broadband penetration rates were 19% in Africa and 53% in the Middle East in 2019
- It is expected that OTT video segment will keep growing in this region because many services like StarzPlay and Netflix allow offline content viewing. These services also use high-end technology to optimize streaming quality for slow data download speeds.
- Many OTT video platforms are entering into partnerships with pay-TV and telecom services
- OTT video adoption is expected to increase further as these partnerships will help the platforms to benefit from the telecom companies’ Direct Carrier Billing technology (DCB) and vast subscription base.
DCB technology has a significant role to play as it is expected to help consumers subscribe to online video streaming platform with ease. The technology enables mobile subscribers to buy OTT video content without even having credit cards.
Some of the important OTT adoption findings from the AME region are as follows:
- Countries within the Middle East and North Africa (MENA) region have a much better SVoD market, in technological terms, relative to the Sub-Saharan Africa (SSA) region. It is expected that OTT video consumption will increase dramatically once mobile and fixed broadband access improve based on commercial 5G adoption.
- The AME SVoD market continues to become more diverse as more and more OTT services and partnerships are formed. These services typically create a combination of original, local, and multi-lingual content to draw consumers’ attention.
- Multiple partnerships were formed between OTT services and telecom service providers in the past few years. One of the most important developments was the partnership between Viva Kuwait and StarzPlay. Users can buy video content without using a credit card.
Impact of Developing Market on Global OTT Demand
The growth in demand for OTT and subscription-video-on-demand (SVoD) in the developing market has been a big contributor to the increase in global OTT demand. It is expected that the global OTT market will generate revenues of over $332 billion by 2025. Some of the contributing factors from the developing market include:
- Growing demand for live streaming channels
- Availability of different types of content
- Advances in OTT technologies
At the same time, these markets still don’t have the data network infrastructure near that of the developed market. Even when this factor hinders this market, it is growing at a breakneck pace.
The Asia-Pacific region is expected to grow at 20.8% CAGR between 2018 and 2025, the fastest in the world. The main driving force behind this growth is the plan for bundling OTT services into data plans by the carriers. The global OTT market is expected to grow at 16.7% CAGR during the same period.
When it comes to segmentation, the latest available stats are available only for 2017. The findings for the developing market are as follows:
- The solution segment had the highest share, accounting for over 60% of the market. This was because of the growth in demand for innovative OTT solutions for media sharing applications.
- The services segment was expected to grow at the fastest rate of 18.3% CAGR during the period.
- Smartphones segment (device type segmentation) had a 33% market share in terms of revenue generation. It was also expected to grow at the fastest rate.
- Video segment (content type) was expected to grow at a CAGR of 18.3%. This segment had the largest share, 33%, in 2017.
Some of the other segments in this market include smart TV, set-top box, gaming consoles, tablets, and PCs.
OTT Demand – Challenges & Potential
The demand for OTT online video streaming platform in developing countries has been hindered by low fixed broadband penetration. Some of the other challenges include small investment, inadequate coverage, and more significant segments of the low-income population. Yet, these markets are recording the fastest growth rate because of the rapid increase in per capita income and Internet speeds.
These countries have experienced significant improvements in the performance and speed of internet connections. Brazil is an example of one of the fastest-growing markets in terms of video streaming services. Some of the valuable market stats, available until 2017, are as follows:
- 44% of households had a minimum 4Mbps connection in Q1 2016
- 63% of households were connected to 4+Mbps connection in Q1 2017
- There was also a noticeable increase in the number of households that received 10Mbps to 15Mbps speeds
Even when the coverage and adoption of such high speeds are low in the developing countries, the average speeds have increased very fast.
Rise of SVoD Services in Developing Countries
The growth in demand for SVoD services is one of the key trends in the rise of OTT demand in the developing markets. SVoD services were available to just 1.3% of households in developing countries in 2014. This figure grew to 6.4% in 2019. Some of the factors that triggered the growth in OTT services include:
- Increase investment in broadband infrastructure
- Improved network reliability, performance and speed
The increased SVoD services penetration in these markets is expected to be a significant factor in fueling the OTT market growth in the near future. Some of the essential developments in this segment are as follows:
- OTT video segment was expected to reach 103 million households by the end of 2019
- This figure was only 19.4 million at the end of 2014
- Across the developing world, OTT video is mostly funded by advertising
- Paid models have also seen some growth in hybrid business models
- Many services, such as some of the top 10 OTT platforms in India, are offering lots of free content with the intention of expanding their customer base
Even with free content, premium SVoD and TVoD content is positioned to drive more revenues.
Many more factors drive the rise in OTT demand in the developing world. This includes the level of flexibility, personalization of content, and ease provided by these services.
Streaming services have empowered home entertainment, allowing consumers to consume content based on their choice of content type, genre, and other options. The flexibility and ease-of-use provided by these platforms, allow viewers to enjoy a seamless viewing experience.
Similar to other markets, the emerging markets are also expected to see most of the growth in the area of smartphones and tablets streaming devices segment. This will be fueled by so many underlying factors in this devices segment – growth in high-speed data networks, increased demand for mobile-connected devices, mobile subscriptions, new features, and advanced capabilities.
The growing trend of sharing rich media content, among consumers, is also expected to be a significant factor leading to the growth of online video streaming platform. Even in an ecosystem with rising concerns about digital privacy, OTT demand is expected to continue growing at a fast pace.