Netflix helped boost subscription services to nearly 40% of the UK OTT market. The worldwide OTT video market reached nearly US$ 11B in 2013, of whichNetflix is also a significant contributor in the North American and expanding Latin American markets. According to ABI Research’s findings, OTT revenue share will shift to TVOD (transactional video on demand) and advertising as new services emerge.
Part of the driving force for TVOD, and more specifically EST (electronic sell-through), is propelled by the success of UltraViolet, which still has an uncertain future. Senior analyst Michael Inouye commented, “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. 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.”
ABI Research expects EST to grow, but rentals will capture a significant portion of the transactional OTT market. This forecast speaks more to the impact of subscription and advertising based services than the prospects for UltraViolet as an EST platform. 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.”
These findings are part of ABI Research’s OTT and Multi-screen Services Research Service.
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