Explosion of New OTT Services Due in Part to Netflix's Expanding Reach

by Brett Sappington | May. 14, 2015

Over the past year, OTT video services experienced a boom of activity across most global markets, including expansion for existing players and a new wave of market entrants.  

Netflix has driven the growth of OTT video services and a new wave of emerging competitors more than any other single company. By the end of 2014, the company reached over 54 million total paying subscribers, adding over 6 million subscribers in the U.S. alone. Startup players, emboldened by Netflix’s success, have spun up new services in an effort to stake a claim in the market, and media companies have begun to launch their own OTT services to build brands and expand viewership. All want to gain market share and consumer mind share before Netflix grows to dominate their market as it has done in the U.S. market.

However, despite the leading position of Netflix, Hulu, and Amazon in the U.S, a variety of new players have entered the OTT market within the past year, with several launching services within the past few months:

  • CBS All Access
  • Sling TV
  • Noggin
  • HBO Now
  • CraveTV
  • shomi
  • Presto Entertainment
  • Nolim Films

Several factors are driving this wave of new services:

  • Ease/cost of service delivery – It is easier and less expensive than ever for content creators and rights holders to get their content onto consumer screens. As a result, a wide variety of organizations (including universities, religious organizations, and other entities) are making their content available both live and on-demand.
  • Enablement via CE platforms and app stores – Connected devices such as Roku, Apple TV, smart TVs, game consoles, and similar platforms provide a new channel for video services to reach consumers—a channel not dominated by pay-TV providers or Internet giants. Many of these devices have app stores that allow services to more easily distribute and consumers to more easily discover video service player apps.
  • First movers in the second wave of OTT – This past year, several companies, sensing that a new wave of OTT was imminent, moved quickly from planning to implementation in order to be among the first to offer services. By doing so, they hope to gain a share of the market before it becomes overcrowded.
  • Shifting ad revenues and improved ad technologies – Advertising executives claim that the percentage of advertising budgets dedicated to online video is increasing; the industry is moving from initial testing of this medium to its inclusion as an important part of advertising campaigns. Additionally, innovations in online video advertising technology allow OTT video services to better target, deliver, sell, and acquire data for video ads. The net result of these improvements is an enhanced ability for OTT video services to monetize content via advertising.

Parks Associates explores the exploding OTT video market in its Q1 2015 industry report TV Everywhere and the New World of OTT. The firm also announced a new service that tracks over 100 OTT video services around the world—for more information on this tracker service, click here.

Further Reading:

Tags: OTT, pay TV, streaming

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