Online video to be driven by ads
Advertising will remain the largest generator of online video revenues over the next five years despite the market maturing, Informa Telecoms & Media predicts
Total revenues are predicted to hit $37 billion (€28.5 billion) in 2017, which will be generated by three main areas: advertising, subscriptions and transactions. While the figure seems high when considered in isolation, Informa notes online video will account for 8% of total TV and video revenues by 2017, and will only break double figures by 2020 if current growth rates are maintained.
The sales income will also be concentrated on a few key players, Giles Cottle, principal analyst at the firm notes. Firms including Netflix, YouTube, Apple and global broadcasters like Hulu currently generate 70% of online video. “So if you aren’t one of these players, then the chances are you aren’t making a great deal of money from online delivery today,” the analyst says.
A shift is predicted in the market as operators and content publishers begin pushing online video beyond desktop PCs onto tablets and connected TVs. “The big change to the OTT revenue mix will come when operators start to offer not just low-cost online services, like Sky’s Now TV, but stand-alone online versions of their services that come close, in terms of content availability and price, to their core pay TV services today,” Cottle forecasts.
Regionally, the firm expects the US’ share of overall revenue generation to fall from 75% currently to under 60% in 2017, as Europe and Asia Pacific grow.