OTT to Show 10% Annual Growth Over Next 5 Years, Forecasts PwC
Look for the over-the-top (OTT) video market to show impressive growth over the next five years. PwC released its Global Entertainment and Media outlook 2018-2022, and forecasts that the OTT space will show a compound annual growth rate (CAGR) of 10.1 percent. The only segment in the entertainment space with a higher CAGR is virtual reality with 40.4 percent, but that's coming from a low starting point.
As the chart below illustrates, internet advertising, video games/e-sports, and internet access will also see strong gains. Only magazines and newspapers show a decline.
While Netflix is the dominant player in the OTT space and Amazon also invests heavily in content, PwC notes that Apple is making moves to be the third biggest international OTT company by sinking $1 billion in original content. Having exclusive content and the rights to high-profile sports is crucial for expanding subscribers and maintaining market share, the report says.
The growth of streaming is changing the revenue model for video, as more consumers, especially well-off consumers, move to ad-free subscription services. Over 80 percent of home video revenue will come from OTT services by 2022, PwC forecasts.
The report emphasizes the convergence taking place in the entertainment market, where companies are changing their business models to target viewers directly. While these companies have access to more data than ever, the challenge is to keep it safe and maintain the public's trust.
"As more E&M companies enter direct commercial relationships with customers, whether selling products inside video games or signing up subscribers to OTT apps, they are assuming more responsibility for the protection of credit card numbers," the report says. "In an age of large-scale hacks, it is natural for users to question whether it makes sense to transact so freely."
Full report segment data is available to PwC customers.
Streaming entertainment growth is increasing steadily in developed countries, but at a much more aggressive rate in less-developed areas.
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