Netflix takes iron grip on transitioning OTT market

Editor | 29-01-2014

Buoyed by the success of House of Cards and seeing the rewards of an aggressive marketing campaign, Netflix has grabbed nearly two-fifths of the UK over-the-top (OTT) market, says ABI Research.

According to ABI Research's findings, the OTT leader is replicating in the UK its continued success in the US and growing expansion in Latin America which has been a key driver in taking the worldwide OTT video market to nearly $11 billion in 2013.

Yet on a broader note, ABI also believes that there is a fundamental shift taking place within the OTT arena which will see revenue share shift to transactional video-on-demand (TVOD) and advertising as new services emerge.

Overall, ABI Research expects electronic sell-through (EST) to grow and that rentals will capture a significant portion of the transactional OTT market. Part of the driving force for TVOD, and more specifically EST, ABI suggests, is the UltraViolet project which it concedes still has an uncertain future. This it says speaks more to the impact of subscription and advertising-based services than the prospects for UltraViolet as an EST platform.

"While we still believe UltraViolet can succeed in moving consumers to pure electronic libraries, from our conversations it is clear others are far more pessimistic," commented senior analyst Michael Inouye. "UltraViolet continues to experience some growing pains as the fragmented market prevents some of the key benefits UltraViolet touts; however, it still remains the most comprehensive solution to date. If UltraViolet fails to replace physical media this would undoubtedly impact the outlook for EST."

Practice director Sam Rosen added: "The pace of change within the video market has been remarkable. The next wave of disruptive services will be national OTT services from existing pay-TV market participants, as indicated by Verizon's acquisition of Intel Media and Sony's cloud TV hopes. As more digital content becomes available, consumer's perceptions of ownership will change instead of moving from physical media to electronic purchases (EST), video is looking increasingly like music where consumer's access owned and subscribed libraries of content via services rather than personally amassing collections."