Global Over the Top (OTT) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Global Over the Top (OTT) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Over the Top (OTT) Market is expected to register a CAGR of 14.23% during the forecast period. The onset of the COVID-19 pandemic positively impacted the OTT landscape, with audiences consuming more content at home via OTT devices. This is likely to accelerate the growth of this format. The OTT opportunity is further deep when looking at the region’s mobile-first economy, combined with the rising OTT subscription rate. An increasing number of consumers have a digital TV in their pocket, which presents an exciting opportunity for media buyers looking to take advantage of changing consumer trends.

Key Highlights

• Over the top (OTT) is a film and television content platform provided via a high-speed internet connection instead of a cable or satellite provider-based platform. OTT adoption has significantly aided the video, music, podcast, and audio streaming category. Increasing adoption can be attributed to narrow genre choices, packaging flexibility, wider device availability, internet penetration, and lower costs. Furthermore, the rising demand for customized content led to significant adoption rates of OTT devices.
• Further, players offering OTT platform services are no longer interested in being viewed as platforms just for accessing movies and TV shows but are also investing in the production and licensing of their content. Such a scenario has resulted in direct competition with traditional TV and the OTT industry. The competition is further heightened with the deployment of advanced technologies within the platforms.
• Increasing adoption of OTT can be attributed to the narrow genre choices, flexibility, wider device availability, internet penetration, and overall lower costs. Furthermore, the rising demand for customized content led to significant adoption rates of OTT devices. This offered the users the flexibility to view varied content. Also, affordable rates of high-speed internet across emerging economies led to a massive increase in the adoption rates of subscription services, according to user convenience.
• This reflects key consumer behavior in terms of smaller size and narrower content of OTT services, leading to wallet fragmentation (flexible payment models), thereby pushing buying decisions flexibly from the household to the individual level.
• The onset of the COVID-19 pandemic positively impacted the OTT landscape, with audiences consuming more content at home via OTT devices. As per Zuora’s Subscription Economy Index Report, trends of the COVID-19 impact on subscriber acquisition rates from March 1-31, 2020, in comparison to the last 12 months, suggested that the global subscription growth rate for OTT Video Streaming companies grew 7x in March 2020, as compared to the growth rate over the previous 12 months.

Key Market TrendsIncreasing Adoption of Subscription video-on-demand (SVOD) Due to Smart TV Penetration

• Subscription video-on-demand (SVOD) stands for subscription video-on-demand: SVOD, like standard pay-TV packages, allows customers to access an entire catalog of programming for a fixed monthly fee. The main factor responsible for the surge in the popularity of SVOD streaming platforms, like Netflix, Amazon Prime Video, Hulu, HBO, and Disney+, is that the user gets unlimited access to original and high-quality content on the go.
• Further, the pricing innovation, bundling, and availability of original premium content for access to users in the country have increased the adoption of subscription video-on-demand (SVOD) services offered by the OTT platforms.
• In India, the top 5 metro cities account for 55% of OTT video platform users, while Tier one cities account for another 36%. As per the survey, Hotstar leads the Indian OTT video content market, followed by Amazon's Prime Video, SonyLIV, Netflix, Voot, Zee5, ALTBalaji, and ErosNow in terms of the percentage of respondents subscribed to each platform. ErosNow users were the most engaged users, with 68% of its users indicating that they watched content daily. The platform continues to thrive through partnerships. In India, it partnered with Xiaomi for pre-installation on smart TVs.
• In a country like the United States, The Walt Disney Company announced it had reached 10 million subscribers upon initial launch, putting its Disney+ service fourth on the list. Also, Netflix had 69.97 million U.S. subscribers. The subscriber base in the United States accounts for around a third of Netflix's worldwide streaming subscriber base.
• Along with providing messaging services, some OTT apps also provide the functionalities that a broadcast channel provides to its customers. With a high adoption rate, users broadcast entertaining videos, music, and local or international news to many other users. This wide range of applicabilities is accelerating its adopted growth.

North America Accounts for the Significant Market Share

• In the United States, 64 million homes are accustomed to OTT, with the average home viewing value estimated at 86 hours of OTT content in a month. Furthermore, nearly 66% reach homes with Wi-Fi, with OTT content genres primarily related to sports, education, and entertainment witnessing increasing developments.
• OTT for sports is becoming increasingly attractive. Growing investments in content acquisition across this domain highlight how numerous companies are entering the OTT space. For instance, as of August 2020, Amazon Prime announced its offerings for gamers via the launch of a service called Prime Gaming.
• Based on its earlier streaming services for movies and TV shows, Twitch Prime/Prime Gaming is expected to provide free games, game content, and a free Twitch channel subscription, as a part of its standard Prime membership. The company additionally attributed this action to the growing market for new content for games in North America.
• Similarly, broadcasters, pay-TV operators, and content owners in the TV environment represent both a challenge and an opportunity. These industry players are increasingly looking for new ways to reach, engage, and retain fragmented audiences for their content.
• With a rapid mix of linear and OTT providers, the US media industry has been on the edge of diversifying more of its content offerings across its direct-to-consumer (DTC) channels. Like, Disney sought after bundling its ESPN+ and Hulu.

Competitive Landscape

The Over the Top (OTT) Market is fragmented. With many media and content companies jumping on the streaming TV bandwagon, the marketplace is becoming increasingly competitive, creating even more competition for high-quality content to keep viewers hooked. The companies are focusing on product innovation to gain consumer attention. Key players are Netflix Inc., Amazon.com, etc.

• December 2021 - Netflix slashed its SVOD subscription price by 60% in India. The mobile-only plan was reduced to USD 1.96 per month from USD2.62, 2 dollars decreased the standard plan to USD 6.58 per month, and the premium plan was reduced to USD 8.55 from USD 10.59 per month.
• September 2021 - In Kenya, Netflix is releasing a new free Android mobile plan that will allow users to watch a limited selection of its repertoire, including full seasons of certain shows. The Netflix mobile plan for Android enables users to join without submitting any financial information.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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