The over the top (OTT) devices and services market is expected to register a CAGR of 16.2% over the forecast period (2020-2025). The adoption of OTT applications has led to various strategies in providing services. As subscribers show a willingness to pay for premium content, OTT players are coming up with freemium models that offer free access to a selected content catalog to acquire new subscribers along with premium content and services for paying subscribers to drive up average revenue per user. Spotify and iHeartRadio adopted a freemium model. Spotify derives more than 90 percent of its revenue from subscription fees, touting 75 million paying subscribers out of its 170 million monthly users.
- Growth in the adoption of smart devices & greater access to higher internet speeds is driving the market. By 2025, digital growth is expected to add over a billion middle-tier consumers in the upcoming markets. The adoption of smart TV and the smart speaker has already led to the high usage of the OTT platform, the newest category of screened in-home device to emerge is the smart display which is also a streaming video platform. At present, one-in-five US broadband households own a smart display. Tubi TV announced that it is now available on AmazonÕs Echo Show as well as GoogleÕs line of Nest Hub devices, becoming the first AVOD service available on the smart displays.
- Further, in tests, 5G is roughly 100 times faster than the best available 4G LTE networks. The success of OTT content publishers will reflect this trend, and it is estimated that twenty-nine percent of consumers would pay a premium if 5G provided a better quality video. Streaming 4K video takes up about 30 Mbps of internet bandwidth. For streaming, the user should have at least double that bandwidth available. The rise of 5G will enable an explosion in streaming video quality by making 4K streaming solutions possible.
- The ongoing shift towards commoditization of sporting services coupled with growing competition among OTT providers is driving the market. With the rapid commoditization of data and the ongoing price wars, the competition is rising high. Of all the innovations in sport, OTT streaming will arguably have the most significant impact. According to Deltatre, global distributors of sports content (or operators) currently commit 15% of the total budget to develop the OTT technology stack worth over USD 6.8 billion by 2021 in the United States. Further, IP-delivered services from leagues, federations, and operators are the future gateway for sports consumption with ŌOTT 2.0Õ expected to emerge by 2021.
- Further, on the new entrant front and aware of the competitive market, DAZN launched in the US in September 2019 with an emphasis on combat sports and the tag of Ōthe worldÕs largest sports streamerÕ following a USD 1billion deal struck with Matchroom Boxing. Later in 2020, it plans to move more into AmericaÕs sports heartland with a nightly Major League Baseball show that will be built upon live cut-ins to action from around the league, showcasing critical plays and big moments.
- Furthermore, with most of the people now staying at home due to the nationwide lockdown by the Covid-19 pandemic, the OTT audio platforms may see a rise in their revenues. Currently, the ad-based model and the bundled model are the major sources of revenue for OTT audio players. In India, most users are likely to switch to a paid OTT audio subscription only if the charges are approximately Rs 25 per month, adding that 62 percent of the consumer surveyed are willing to switch to a paid subscription model.
- In addition, ZEE5 witnessed an over 45% rise in paid viewers and subscriptions going over 80% during the lockdown. Also, the launch of Disney+ outside of North America coincided with the pandemic, causing a boost in the number of triallists and paying customers: it had more than 50 million paying subscribers in early April 2020. However, several pay-TV providers, notably BeIN Sports, have suspended rights payments to sports leagues that have canceled matches.. This fundamentally changes the outlook for OTT linear services and wipes out more than USD5 billion of revenue in the remainder of 2020.
Key Market Trends
Increasing Adoption of Subscription video-on-demand (SVOD) Due to Smart TV Penetration
- According to Cisco, Connected TVs will grow third fastest (at a little less than a 6 percent CAGR), to 3.2 billion by 2023 after M2M connections and smartphones. Around 33% of people watch online videos on a Smart TV, with video-enabled apps as compared to 23% who use a video game console.
- In India, the top 5 metro cities account for 55% of the total OTT video platform users, while Tier one cities account for another 36% of the users. As per the survey, Hotstar leads the Indian OTT video content market, followed by AmazonÕs Prime Video, SonyLIV, Netflix, Voot, Zee5, ALTBalaji, and ErosNow in terms of the percentage of respondents subscribed to each platform. ErosNow users were the most engaged users, with 68% of its users indicating that they watch content on the platform daily. The platform continues to thrive through partnerships. In India, it partnered with Xiaomi for pre-installation on smart TVs.
- Further, in September 2019, OnePlus ventured into the Indian smart TV market with the launch of OnePlus TV. The device combined imagination and intelligence to seamlessly connect mobile and home networks for the future of interconnectivity. Hungama, Eros, and ZEE5 content have been deep-integrated into the OnePlus Play dashboard. Other content partners include Amazon Prime Video, Hotstar, SonyLiv, and YouTube. This significantly shall provide growth to the Subscription video-on-demand (SVOD) segment.
- In the country such as the United States, The Walt Disney Company announced it had reached 10 million subscribers upon initial launch, which would put its Disney+ service fourth on the list. Also, Netflix had 69.97 million U.S. subscribers. The subscriber base in the United States accounts for around a third of Netflix's worldwide streaming subscriber base, which at the end of 2019 stood at 167 million.
- Further, in July 2019, DocuBay, an international documentary VOD streaming service by IN10 Media, announced a significant collaboration with Foxxum. As part of the partnership, DocuBay will provide its library of premium content on the Foxxum Smart TV platform worldwide, comprising of several major markets, including Europe and the United Kingdom.
- Along with providing messaging services, some of the OTT apps also provide the functionalities that a broadcast channel provides to its customers. With a high rate of adoption, users broadcast entertaining videos, music, local or international news to a large group of other users. This wide range of applicabilities is accelerating its adopted growth.
North America Accounts for the Significant Market Share
- The consumption of media content in North America, especially in the United States is increasing tremendously with a switch from traditional media to digital media. The increasing internet speeds, coupled with the growing number of devices that support digital media, have provided the consumers with the freedom to access media content anywhere and anytime.
- According to VBA,71% of internet users also use OTT services, and 47% of US Wi-Fi households own a streaming box/stick. There are over 200 OTT providers in the United States. As of 2019, there are 182 million OTT subscription video service users in the country.
- Also, according to Instituto Federal de Telecomunicaciones de Mˇxico and Omdia, as of January 2020, there were 164 over-the-top (OTT) subscriptions per 100 households in the United States and 132 in Canada, making North America the largest OTT market worldwide.
- Further, as of July 2019, Netflix had the most viewers in the United States, reaching 158.8 million people compared to Amazon Video's 96.5 million. Also, Hulu has the reach of 75.8 million viewers in the U.S., making up over 40 percent of subscription OTT video service users.
- Furthermore, YouTube users outnumber those of any other platform in the US, with 73% of US adults identifying as users in 2019. In the US, YouTube is the most popular app with the younger demographics, with 18-24 year-olds, and 25-34-year-old YouTube users outnumbering those of any other app. This significantly holds the market growth for Advertising Video On Demand (AVOD).
- Further, in June 2020, Haystack TV, a leading ad-supported streaming provider that connects viewers with hyper-relevant local, national, and global TV news, has rebranded its popular curated streaming service from Haystack TV to Haystack News. With nearly 300 U.S. broadcast stations supplying Haystack News with local news content, Haystack is the only AVOD news service with local news coverage for more than 90 percent of all local U.S. markets with availability across all-new Smart TV devices. Haystack achieved 145% new user growth the past 12 months and more than doubled usage for its personalized OTT news service.
- Furthermore, With U.S. consumers asked to refrain from social gatherings and shelter-in-place at home due to COVID-19, media consumption is prepared to boom. For instance, in the United States, there has been a 72 percent increase in the number of Netflix subscriber profiles that were used to stream video each week. Residents in the Tri-State region of New York, New Jersey, and Connecticut, with some of the strictest shelter-at-home policies, spent significantly more time streaming on Netflix.
The Over the Top (OTT) Market is fragmented as with many media and content companies jumping on the streaming TV bandwagon, the marketplace is becoming increasingly competitive, and itÕs creating even more competition for high-quality content to keep viewers hooked. The companies are focussing on product innovation to gain consumer attention. Key players are Netflix Inc., Disney+, etc. Recent developments in the market are -
- June 2020 - Nexstar Digital, a wholly-owned subsidiary of Nexstar Media Group, Inc., announced that it entered into a multiyear agreement with FreeWheel, a Comcast Company, to use its Strata platform. The new agreement provides advertisers and agency partners easy access to NexstarÕs premium digital inventory and the ability to send orders electronically directly in their Strata workflow. As part of the new agreement, FreeWheel integrated easy access points for Nexstar DigitalÕs video and OTT inventory into its Strata platform. As a result, agencies can now use Strata to discover, customize, and access the complete suite of Nexstar Media GroupÕs digital advertising inventory.
- June 2020 - Molotov announced to provide infrastructure service to other OTT platforms. The company is using its technical experience in this field to help other companies build their own streaming services. Molotov Solutions plans to work with media companies as well as telecom companies. Molotov Solutions offers a complete OTT platform. It can operate the backend, ingest live and on-demand video and distribute the content on many different platforms, such as iOS, Apple TV, Android, Android TV, smart TVs from Samsung and LG, desktop browsers, etc.
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1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.2.1 Growth in the adoption of smart devices & greater access to higher internet speeds
4.2.2 Ongoing shift towards commoditization of sporting & entertainment services coupled with growing competition among OTT providers
4.2.3 Increasing adoption of SVOD (subscription - based services) in emerging markets
4.3 Market Challenges
4.4 Industry Ecosystem Analysis
4.5 Market Opportunities
4.6 Industry Attractiveness - Porter's Five Force Analysis
4.6.1 Threat of New Entrants
4.6.2 Bargaining Power of Buyers/Consumers
4.6.3 Bargaining Power of Suppliers
4.6.4 Threat of Substitute Products
4.6.5 Intensity of Competitive Rivalry
4.7 Impact of COVID -19 on the OTT and TV industry
4.8 Major Partnerships & Alliances between OTT vendors and Smart TV manufacturers
4.9 Evolution of the major business models and pricing strategies of OTT vendors
4.10 Analysis of key demographic factors identified at a global level (Age, Gender, and Income Groups of OTT customers)
5 MARKET SEGMENTATION
5.1 By Geography
5.1.1 North America
188.8.131.52 Current market scenario (Base Indicator Analysis) and market indices (subscriber base, revenue forecasts, and growth trends)
184.108.40.206 Market Breakdown by Type of Service - SVOD, TVOD, AVOD
220.127.116.11 Market Dynamics (High penetration of Smart TV and the presence of major OTT providers have contributed to the growth of OTT adoption in the region| Market consolidation to result in emphasis on collaborations & partnerships)
18.104.22.168 Market Breakdown - United States & Canada
22.214.171.124 Coverage on the major OTT segments - Sports, Education, Entertainment, etc
126.96.36.199 Market Outlook
188.8.131.52 Current market scenario and market indices (subscriber base, revenue forecasts, and growth trends)
184.108.40.206 Market Breakdown by Type of Service - SVOD, TVOD, AVOD
220.127.116.11 Market Dynamics (Europe currently has more than 500 OTT services vying for market share at a local and regional level| Growing emphasis on commodization of OTT to aid growth| Steady demand for Pay-per-view)
18.104.22.168 Market Breakdown - United Kingdom, Germany, France, Nordics, Rest of Europe
22.214.171.124 Coverage on the major OTT segments - Sports, Education, Entertainment, etc
126.96.36.199 Market Outlook
188.8.131.52 Current market scenario and market indices (subscriber base, revenue forecasts, and growth trends)
184.108.40.206 Market Breakdown by Type of Service - SVOD, TVOD, AVOD
220.127.116.11 Market Dynamics (APAC currently accounts for the highest CAGR in the OTT Industry| Favorable demographics and growing cloud of local vendors to further drive adoption| Cost-effectiveness & Localization of services to hold the key)
18.104.22.168 Market Breakdown - China, Japan, India, South Korea, SEA, etc
22.214.171.124 Coverage on the major OTT segments - Sports, Education, Entertainment, etc
126.96.36.199 Market Outlook
5.1.4 Latin America
188.8.131.52 Current market scenario and market indices (subscriber base, revenue forecasts, and growth trends)
184.108.40.206 Market Breakdown by Type of Service - SVOD, TVOD, AVOD
220.127.116.11 Market Dynamics
18.104.22.168 Coverage on the major OTT segments - Sports, Education, Entertainment, etc
22.214.171.124 Market Outlook
5.1.5 Middle East and Africa
126.96.36.199 Current market scenario and market indices (subscriber base, revenue forecasts, and growth trends)
188.8.131.52 Market Breakdown by Type of Service - SVOD, TVOD, AVOD
184.108.40.206 Market Dynamics
220.127.116.11 Coverage on the major OTT segments - Sports, Education, Entertainment, etc
18.104.22.168 Market Outlook
6 COMPETITIVE LANDSCAPE
6.1 Company Profiles*
6.1.1 Netflix, Inc.
6.1.3 Amazon Prime Video (Amazon Inc.)
6.1.4 Roku Inc.
6.1.5 Now TV
6.1.6 DAZN Group
6.1.8 Tencent Video (Tencent Holdings Ltd.)
6.1.9 Stan Entertainment Pty Ltd
7 INVESTMENT ANALYSIS
8 FUTURE OF THE MARKET
Secondary Research Information is collected from a number of publicly available as well as paid databases. Public sources involve publications by different associations and governments, annual reports and statements of companies, white papers and research publications by recognized industry experts and renowned academia etc. Paid data sources include third party authentic industry databases.
Once data collection is done through secondary research, primary interviews are conducted with different stakeholders across the value chain like manufacturers, distributors, ingredient/input suppliers, end customers and other key opinion leaders of the industry. Primary research is used both to validate the data points obtained from secondary research and to fill in the data gaps after secondary research.
The market engineering phase involves analyzing the data collected, market breakdown and forecasting. Macroeconomic indicators and bottom-up and top-down approaches are used to arrive at a complete set of data points that give way to valuable qualitative and quantitative insights. Each data point is verified by the process of data triangulation to validate the numbers and arrive at close estimates.
The market engineered data is verified and validated by a number of experts, both in-house and external.
REPORT WRITING/ PRESENTATION
After the data is curated by the mentioned highly sophisticated process, the analysts begin to write the report. Garnering insights from data and forecasts, insights are drawn to visualize the entire ecosystem in a single report.