Global OTT Revenues to Grow to $72.8B U.S. by 2023: PwC Report
Revenue for the global over-the-top (OTT) entertainment market will reach $72.8 billion U.S. by 2013, forecasts PwC. Pushed by a growing desire for video streaming services, that figure reflects a 13.8% CAGR. Growth is increasing steadily in developed countries, but much more aggressively in less-developed areas. The 2018-2023 global CAGR for SVOD is 15.4%, while that for TVOD is only 6.5%.
Looking at the data another way, PwC says OTT video revenues were 18.6% the size of global TV subscription revenue in 2018. But thanks to strong growth it will rise to 35.4% the size in 2023.
As viewers take on more streaming services, the opportunity now is for aggregators, PwC believes. While Netflix and Amazon are innovative, consumers desperately want to have one central place where they can find something to watch. Pay TV companies currently have a window to solve the fragmentation problem before digital companies like Amazon, Apple, and Google—or some third-party—bring their own solutions to market.
An overview "perspectives" document of PwC's findings is free to download, with no registration required, while deep-dive segment reports are available to paid customers. In the OTT segment report, PwC notes the importance of exclusive and original content in attracting subscribers, pointing out that 90% of Netflix's programming investment goes to originals. At the same time, PwC repeats data it put out in April highlighting that viewers spend more time with licensed content. On Netflix, 80% of content viewed in the U.S. is licensed. So which is more important?
"While licensed content still attracts many viewers, costs for such content are quickly rising," notes Mark McCaffrey, U.S. technology, media, and telecommunications leader at PwC. "Consumers want a robust library, and to maintain that streaming platforms must make investments into their own content. It’s why original programming is a must and why we see the industry quickly jumping on this approach."
In a major milestone, adoption of the leading SVOD service now beats pay TV. Viewers have more choices than ever, and they're happy about that.
While the future looks bright for OTT, increased industry convergence and direct-to-consumer relationships require maintaining a high level of trust.