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OTT Video Market To Grow 21%

Boston — The North American market for over-the-top (OTT) video streaming is forecasted to grow 21 percent in 2014 — hitting $10.7 billion, according to a research study released Tuesday by Strategy Analytics.

Consumer use of video-on-demand services is expected to account for half of the revenue, coming from such services as Netflix and Hulu.

The firm calls consumer-directed OTT services the biggest driver in OTT video revenues, reaching $10.7 billion. Revenue is predicted to double between 2013 and 2019 to $18 billion.

OTT refers to TV and film content delivered over the Internet, rather than from a cable or satellite company.

Breaking it down further, subscription video-on-demand revenue should grow 26 percent in 2014 to $5.1 billion, and will account for 48 percent of total OTT video revenue, Strategy Analytics said.

Meanwhile, retail sales of download-to-own video will grow 13 percent to $1.4 billion (13 percent of OTT revenue) while rental video of streamed content and temporary downloads will grow 21 percent to $681 million (6 percent of revenue), the market study said.

Advertising around OTT content, such as video ads, will account for the remaining 33 percent of revenue in 2014, growing by 17 percent to $3.6 billion.

Subscriptions will account for 48 percent of North American OTT revenue in 2014 and
the lifeblood of the OTT video industry,” according to Michael Goodman, Strategy Analytics digital media director.

“An extensive library of TV shows and movies — with just enough blockbuster titles — at an affordable price has proved a compelling cocktail for consumers,” he said.

Netflix is the market share leader in the subscription end of the business, accounting for about three-quarters of subscription video revenue in North America, Goodman found.

“With its momentum only growing, the other services, such as Hulu, HBO Go, YouTube and Amazon, are left to fight over the scraps,” he said.

North American broadband users will spend an average of almost $29 on OTT services in 2014, up 18 percent from 2013, according to the report.

“By 2019, this will have increased 78 percent from 2013 to $43.51,” Goodman believes.

Between 2013 and 2019, subscription revenues will grow 116 percent to $8.8 billion. Retail sales will grow 58 percent to $1.9 billion, while renting will grow 74 percent to $980 million.

Advertising revenue will increase 109 percent to $6.4 billion.

Goodman concluded: “It’s amazing to think people spent almost half as much on internet film/TV content last year, such a new industry, as they did on DVDs — a format that’s been around for 20 years. By the end of this year there’ll be about 54 million subscriptions to over-the-top video services such as Netflix, Hulu and In five years this will reach about 69 million — at which point OTT revenues will have overtaken DVDs.”