Viewership of live-linear over-the-top (OTT) video is expected to surpass traditional broadcast TV1 within the next five years. The global OTT devices and services market will reach USD 165 billion by 2025 representing a massive increase over the decade from $29 billion in 2015 due to mobile devices and smart TVs2. OTT revenue will grow from $46.5 billion in 2017 to $88.4 billion in 20223.
Subscription video-on-demand (VOD) comprises 40 percent of the OTT market with the majority of the revenue coming from the United States. By 2022, the SVOD penetration will be 132% of US TV households by 2022 with many homes having more than one SVOD platform4. The SVOD total is expected to reach 171 million by 2022 – up from 59 million in 2016 reflecting a 53% increase. By 2021, there will be 855 million users globally utilizing digital video. In comparison, the largest pay TV providers in the US lost 405,000 net video subscribers in Q3 2017, a large increase compared to the loss of 250,000 subscribers in Q3 2016. The biggest losses were seen across the top six cable companies who lost 290,000 subscribers in the most recent quarter compared to a loss of 90,000 subscribers in the same quarter the previous year. Some of the more staggering losses came from Satellite TV services, which lost 475,000 subscribers in Q3 2017 compared to a 5,000 subscriber gain the previous year5.
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The good news is that consumers are simply redistributing spend on video services rather than reducing spend. Therefore, despite subscriber loss, Pay TV providers will see some revenue growth, and the surging demand for vMVPD and multiple subscriptions for SVOD will help drive up ARPU especially in North America and Western Europe.
Although North America is currently the largest video market, China is a strong contender as OTT services proliferate through APAC.
Globally, the consumption among cord-cutters is growing rapidly. On average, cord-cutters consume nearly 80 hours of content per month. Mobile is a major contributor to the OTT video boom as watching TV and video on mobile devices growing 85% between 2010 and 2016. Meanwhile, consumption on fixed screens decreased 14% over the same period6. This will contribute to a 16% gain in OTT revenue from 12% of market share in 2016 to 28% of market share in 2022 totaling $167 billion. In Europe, the market share will increase from 11% to 21% by 20227.
OTT Requires Robust Content Protection
“All TV is now OTT,” according to ABI Research who forecasts that TV will migrate from scheduled content to personalized channels. On-demand video fits busy customer schedules while binge-watching is the new norm for viewing habits – and these trends will require Pay TV providers to shift from legacy broadcast to provide a more agile video delivery with control and flexibility. Cost is another driving factor for OTT with multiple pricing tiers compared to pricey cable TV and satellite bundles which require the customer to buy many channels they do not watch. Lastly, the average person spends over 4 hours per day on their mobile phone and OTT can reach customers anywhere including internationally, on any device8.
Media companies today are under immense pressure from competition and declining subscriber rates. Traditional broadcasters must bridge the old pay TV model with new OTT consumption demands while heightening security for high quality UHD content. As the legacy inventor of DRM, Intertrust is uniquely positioned to solve these current pain points that broadcast providers face. Our product, ExpressPlay XCA™, enables services to go to market quickly by blending the best of both Conditional Access (CA) and Digital Rights Management (DRM). We offer a disruptive, card-less Conditional Access System (CAS) that uses open standard Marlin DRM to let Broadcasters and Network Operators deliver content to a set-top-box (STB) or Smart TV via DVB channels. It requires no dedicated hardware in devices or external modules such as Conditional Access Modules (CAM) and supports both DVB broadcast-only devices and broadband or hybrid devices. ExpressPlay XCA supports multiple use cases that include typical Conditional Access scenarios, IPTV platforms, and OTT services.
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