July 10, 2015 | Authored by: Vindicia Team Blogs
OTT and video revenues will rise to $51 billion by 2020
Many consumers understand the benefits of watching their favorite programming over the Internet, so it's no surprise that the OTT industry keeps growing. According to a study by Digital TV Research and discussed by Broadband TV News, worldwide OTT and video revenues will rise to $51.1 billion in 2020. That's quite a jump from the $4.2 billion documented in 2010.
Although viewers all over the world will be watching more OTT content, the U.S. will continue to be the dominating region. Telecoms.com reported the U.S. market will reach $70 million in five years.
Subscription video on demand will generate even more revenue for the OTT industry than advertising. SVOD will add $14 billion to the sector between 2014 and 2020.
Simon Murray, principal analyst at Digital TV Research, said in the report that Netflix's rapid growth is a big reason why so many more viewers are streaming TV shows and other programming.
"Some of this growth was spurred by Netflix's aim to establish operations in 200 countries by end-2016. Not only has the launch of Netflix boosted each market, but the anticipation of its launch has galvanized local players into action – creating a whirlwind of promotional activity," Murray explained.
Netflix added more subscribers than expected in fourth quarter
It's not shocking that Netflix is helping the OTT industry grow, since the subscription service added 13 million worldwide subscribers last year. According to CED Magazine, Netflix increased its viewer base by 4.3 million just in the final quarter of 2014.
Although Netflix's focus on unique shows has attracted more viewers, the higher licensing costs have decreased profits. To help keep the company afloat, Netflix executives raised the prices by $1 last year.
CEO Reed Hastings said the company plans to borrow $1 billion to finance its expansion to countries outside the U.S.
"It's going to be a very exciting couple years," Hastings said in an interview.
Which billing platform is right for B2C subscriptions?Download