OTT to rake in over US$200bn by 2024, 90% fueled by ad dollars and subscription

The over-the-top (OTT) video market will surpass US$200 billion by 2024, with 90% of that value fueled by subscription and advertising revenue, according to a new report by global tech market advisory firm, ABI Research.

New services such as Disney+ and Apple TV+, coupled with aggressive pricing and packaging, and continued expansion by incumbents are pushing the subscription video on demand market to new heights. The report revealed that subscriptions in the Asia Pacific region have grown significantly, driven by key services such as iQIYI/Baidu, Tencent, Youku Tudou/Alibaba Group in China, and increasing opportunities in India.

The ongoing shift to OTT is predicted by the research report to create value for companies throughout the video value chain, including pay TV operators. In addition, the expansion of new technologies such as 5G, will also further present the market with new opportunities. According to the report, there is over 700 million OTT video in demand subscriptions in 2019, and the pay TV market has over one billion subscriptions. This shows that the attention paid to low latency video is testament to how OTT video is growing but also highlights the ongoing opportunities with live/linear programming.

Michael Inouye, principal analyst at ABI Research said cord-cutting is often regarded as a consequence of expanding OTT consumption, but the market dynamics are more complex, particularly when one considers how the pay TV industry has embraced OTT as a complement and value-additive, rather than strict competition.

"Over time, we expect the traditional pay TV offer to continue to evolve and become indistinguishable from a pure OTT package of services. Increasingly, we're seeing more solutions and conversations about bringing content and services together. This includes pay TV and OTT bundles and extends to cross-platform advertising, analytics, and customer/service management," he added. To Inouye, this makes the market more accessible to a wider range of companies and expands the potential video touchpoints, particularly as new technologies such as 5G, smart home, and Augmented/Virtual Reality play larger roles.

Similar to ABI Research's report, a report by data and analytics company GlobalData said the popularity of OTT video streaming platforms and cord-cutting will ultimately lead to a decline in pay-TV penetration in APAC. According to the report, this will particularly impact developed markets such as Hong Kong and Australia. The GlobalData report showed that the APAC pay-TV market remains very diverse in 2019, with household penetration levels ranging from 11% in Indonesia to 168% in South Korea as of year-end 2018.

In addition, this report too revealed that China and India are currently the largest pay-TV markets in the region with 415.6 million and 177.2 million subscriptions respectively as of year-end 2018, distantly followed by South Korea with 33.2 million subscriptions. However, Malcolm Rogers, telecom analyst at GlobalData said currently, the market is facing growing price pressure and that most OTT players offer their services at a lower price point than traditional pay-TV packages.