Over The Top

This has just reached me from TDG and is worth repeating almost verbatim:

According to a new report from The Diffusion Group, revenue from the delivery of Internet video to the TV will grow nearly six-fold in the next five years, from a meager $1 billion in 2009 to $5.7 billion in 2014. These forecasts are part of TDG's latest digital media analysis, Broadband-Enabled TV: Rise of the OTT Provider, authored by TDG senior partner and digital video expert, Colin Dixon..

Dixon posits that in 2009, pay-per-view services will account for 96% of global OTT revenue, leaving subscription revenue with only 4% of the revenue mix. By 2014, however, annual OTT subscription revenue will have grown 50-fold and account for 31% of global revenue.

Dixon points to current hardware trends as fueling this growth, specifically the ongoing shift to broadband-enabled TVs and the rapid diffusion of ancillary web-enabled platforms such as game consoles, Blu-ray players, and hybrid set-top boxes. Widespread penetration of such platforms will set the stage for a rapid uptake of Internet-to-TV video services, both pay-per-view and subscription-based.

As these platforms more widely diffuse and consumers become more comfortable with using Internet-based TV services, the market will be primed for the arrival of full-fledged PayTV replacement services. Subsequently, TDG expects major OTT service announcements in virtually all global regions in 2010 and 2011, both in terms of stand-alone OTT and hybrid PayTV/OTT TV services, both of which will help fuel growth in OTT subscription revenue to $1.8 billion worldwide by 2014. At that time, North America will account for the vast majority of global OTT subscription revenue ($830 million) followed by Asia ($490 million), and Europe ($407 million). Other global regions will collectively account for only $60 million of this total.

I have some real beef with these findings. First of all, I'm not sure what they mean by IPTV (but our budgets at TV Everywhere do not run to buying the full report, alas..). It also does not account for advertising, product and sponsored-paid-for content.

However, it does demonstrate a trend whereby OTTV services will initially come from stand along box operators and will then become mainstream through companies with established billing relationships wanting to usurp the TV industry, such as ISPs and mobiel providers. OTTV will especially appeal to multi-players, wishing to offer mobile and broadband services with content attached.

Call me an old fogey, but my money is still on the services that can best exploit advertising, whether they charge or not...