Netflix and Amazon drive huge growth in OTT market

The over-the-top video market grew 60% last year to pass US$8 billion, driven by companies like Netflix, Hulu, Apple, and Amazon, according to new figures by ABI Research.

The research found that the three largest markets – North America, Europe, and Asia Pacific – experienced year-on-year growth in excess of 50% in 2012.

ABI predicted that as mobile devices like tablets and other connected devices continue to spread, the market will pass US$20 billion by 2015.

“The shift to digital and OTT distribution is accelerating, particularly as content providers increasingly warm up to these channels,” said ABI senior analyst Michael Inouye.

“While pay-TV services are still afforded many advantages we are approaching the proverbial fork in the road when content owners will decide if they continue down the same path or forge ahead, shaking up the primary means of media distribution as we’ve known it.”

ABI said that currently subscriptions are bringing in more significant revenues in North America than in Europe or Asia-Pacific, but said in the future there would be greater diffusion across different business models as consumer demand moves towards new forms of digital content distribution.

ABI tipped the share of OTT video revenue from subscriptions to fall to less than 32% by 2018, compared to 58% in 2012.

ABI’s practise said that factors that would accelerate change in this market were already falling into place, such as Netflix moving into different international markets and US nets like ABC and CBS enhancing their catch-up services.

“This future, however, isn’t devoid of traditional media nor is it a matter of new channels necessarily winning, but rather a redistribution of wealth within the value chain,” said Sam Rosen, practice director at ABI.