New analysis by IMS Research is forecasting that the over the top (OTT) video market is on the verge of turning potential into commercial reality growing 32% to be worth $16.4 billion by 2016.

In the Over-the-Top Video – Service Delivery & Business Models – 2011 edition report, the analyst fundamentally says that the OTT is no longer about the volume of transactions and is now all about strategic monetisation. IMS believes that the OTT market will see a marked transition from low monthly prices and all-you-can-eat subscriptions which are common among current OTT offerings.

In particular it sees companies such as Google, Yahoo! and Microsoft taking on Hulu and Netflix and at the vanguard of converting OTT viewers into paying customers.

As well as these companies, IMS expects more retailers to enter the OTT market with digital rental and purchase services in an effort to recoup declining revenues from physical media sales. Indeed IMS Research projects that retailers will grow their share of the OTT market, accounting for 13% of world OTT service revenues in 2016. It also forecasts pay-per-view transaction revenues to grow at a faster pace.
Commented Anna Hunt, CE principal analyst at IMS Research: “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...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.”