OTT video revenue explosion forecasted

Data unveiled by analysis firm Digital TV Research have projected a doubling in global OTT video streaming revenues from $26bn in 2015 to $51.1bn in 2020; highlighting the growing market share of OTT players in broadcasting.

The report forecasts subscription-based video on demand services will grow to become the primary source of revenue generation, ahead of advertising, with projected global revenues rising from $9.9bn to $21.7bn by 2020. Advertising, meanwhile, will grow to reach $21bn from $11.4bn today.

Contributing to the global growth in VOD subscriptions, the US market will grow to 70 million by 2020, representing 28.1% of the global market.  In 2010, the US generated subscription revenues of $753 million; Digital TV Research reckons that number will grow by 765% by 2020, to $6.52bn.

Simon Murray, who’s a principal analyst at Digital TV Research, points towards Netflix’s global growth as the primary reason behind the surge of OTT TV streaming.

“SVOD has developed even faster than we expected in our last edition a year ago,” he said. “Some of this growth was spurred by Netflix’s aim to establish operations in 200 countries by end-2016. Not only has the launch of Netflix boosted each market, but the anticipation of its launch has galvanised local players into action – creating a whirlwind of promotional activity.”

Beyond the growth seen globally, China will see the most impressive growth over the next five years. It is predicted the country’s VOD revenues will jump from $40m in 2010 to $2.82bn by 2020, and will become the fourth highest grossing country in the world for the OTT TV streaming market.

According to Reuters, Chinese e-commerce giant Alibaba is set to launch a brand new online video streaming service this summer; with August a likely launch date. Patrick Liu, Alibaba’s head of digital entertainment, confirmed the service will be called Tmall Box Office (TMO), and looked towards Netflix and HBO in the US as benchmarks.

“Our mission, the mission of all of Alibaba, is to redefine home entertainment,” he said. “Our goal is to become like HBO in the United States, to become like Netflix in the United States.”

In a busy day for digital content streaming, Google has announced that video streaming website YouTube will be launching a dedicated platform for gamers in the summer. The appropriately titled “YouTube Gaming” app and website will provide a platform for gamers to host live streams of videogame sessions, game play guides, speedruns. Writing on the YouTube blog, product manager Alan Joyce highlighted how streaming is becoming so important to today’s digital consumers.

“Live streams bring the gaming community closer together, so we’ve put them front-and-center on the YouTube Gaming homepage,” he said. “And in the coming weeks, we’ll launch an improved live experience that makes it simpler to broadcast your gameplay to YouTube.”

Looking beyond the features unveiled by both Google/YouTube and Alibaba, the growth of video content demand is apparent. Cisco’s VNI forecasted IP video traffic to consume roughly 80-90% of global consumer internet traffic by 2018; and as video files streamed in HD move towards 4K, the pressure faced by operator networks will only intensify further.

Announcements such as these serve to illustrate how service providers, be it mobile or fixed, are becoming increasingly obliged to provide high-availability, high bandwidth-consuming content in an age where even a momentary lapse in service is a nigh-on disaster. How operators utilise emerging networking tech to manage the growth in IP video traffic will be imperative in the move towards 2020.