60% growth in worldwide OTT revenue in 2012

Companies such as Netflix, Hulu, Apple, and Amazon helped drive the OTT video market past $8 billion in 2012, according to ABI Research.

The three largest markets—North America, Europe, and Asia-Pacific—experienced YoY growth in excess of 50% in 2012. The continued spread of connected CE and increasingly mobile devices, like tablets, are expected to push the market past $20 billion by 2015.

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

The dynamics around revenue generation continue to change and currently vary by region (e.g. subscriptions more significant in North America than in Europe or Asia-Pacific). In time, however, we expect a greater diffusion of revenue across the various business models. For instance, in 2012 58% of OTT video revenue came from subscription service, but we anticipate this share to fall to less than 32% by 2018. In large part this is driven by a continual shift in consumer demand towards newer forms of digital content distribution.”

“While we still see great value and strength in the Pay-TV sector we are also starting to see the pieces that will accelerate change fall into place,” added practice director, Sam Rosen. “Whether it’s Netflix expanding to International markets or ABC and CBS enhancing catch-up services the building blocks that will restructure the how, when, and where consumers view content are starting to give shape to a new media future. 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.”