OTT revenues to rocket to $42 billion by 2020
According to a new report from Digital TV Research:
- Global online TV and video OTT revenues (over fixed broadband networks for 51 countries) will reach $42.34 billion in 2020; up from $3.96 billion recorded in 2010 and the $19.03 billion expected in 2014
It seems online TV and advertising is the main driver behind the increase in OTT revenues. The US will be the main market for the foreseeable future but Japan and China are expected to move into second and third place by 2020.
- Online TV and video advertising has been the key driver for the OTT sector, with revenues of $8.3 billion expected in 2014, up from $2.4 billion in 2010. Rapid advertising expenditure growth will continue, to reach a global total of $18.1 billion in 2020.
All this is good news for companies like Netflix.
Reed Hastings, CEO of Netflix, last week stated that Netflix expected to achieve penetration of a third of homes seven years after launch.
- Extrapolating from this projection, Simon Murray of Digital TV Research estimates that Netflix is aiming for 104 million international subscribers by 2020 – and this is just for the countries where it has already launched.
While the rise in OTT revenues and OTT penetration is welcome news for Netflix and the like, what does it mean for fixed and mobile operators? Can the operator’s infrastructure and investment cycles keep pace with the expected growth in video? Is the current model sustainable?
Operators have long complained that they should not have to carry OTT traffic for free. Earlier this week MTN SA CEO Ahmad Farroukh, disparaged OTT players as ‘free riders’ (here). Although the likes of WhatsApp may be a threat to operators traditional revenues sources (Voice & SMS) it does cause too many traffic problems. Video is another story entirely.