OTT drives online TV and video to ‘sustained boom’ over next five years

Joseph O'Halloran | 31-10-2012

A new report from Digital TV Research is predicting that global online TV and video revenues will increase massively over the next five years to reach $28.72 billion.

This would represent, says The Online TV and Video Forecasts report a rise of almost $25 billion since 2010. Furthermore the expected $11.14 billion for 2012 from fixed broadband developments alone, and not including smartphones or tablets, is said to highlight just how the over-the-top (OTT) TV sector is on the brink of a huge take-off as the key players expand globally, companies consolidate and as new partnerships are announced on a daily basis.

Digital TV Research calculates that by the end of 2017, the expected growth will lead to a universe of 480 million homes in 40 countries watch online television and video, up from 182 million in 2010. By 2017, almost two-thirds of the world’s 745 million fixed broadband homes will view television and video online, up by almost twice the proportion of the 473 million fixed broadband total in 2010.

This growth is set to enable a cash bonanza for the sector and the analyst forecasts that online TV and video advertising will be a key driver in the OTT sector, recording revenues of $6.0 billion in 2012, up from $2.4 billion in 2010. It adds that ‘rapid’ advertising expenditure growth will drive global revenues to $14.7 billion by 2017.

Interestingly, and perhaps showing that the new medium will establish new revenue streams, Digital TV Research predicts that advertising’s share of total OTT revenues will fall from two-thirds in 2010 to barely over a half by 2017 with substantial gains in subscription, rental and DTO which by 2017 will account for $6.884 billion, $2.74 billion, $4.362 billion respectively.

Despite fierce competition and rapid growth elsewhere, the US will likely remain the dominant territory for online TV and video revenues. That said its current grip on the market will be loosened somewhat with share of total revenues said to be set to drop from 53% in 2010, when the country recorded revenues of $2 billion, to 38% in 2017 when it wil likely account for $10.952 billion. By stark contrast China’s online television and video revenues is expected to rocket from $49 million in 2010 to $2.057 billion in 2017, pushing Japan into third place.