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The global over the top (OTT) services market size stood at USD 30.23 billion in 2018 and is projected to reach USD 86.80 billion by 2026, exhibiting a CAGR of 14.3% during the forecast period.
The term “over-the-top” refers to the offering of services and content over an infrastructure such as smartphones, smart TV, and gaming consoles that is not under the administrative control of content or service provider. Previously, OTT was only limited to the distribution of audio and video content over the internet, but owing to the advances in technology from recent years, the definition has been extended to include any service and content available on the internet.
OTT providers rely on global internet speeds and access networks for streaming services to reach out to the customers. Services provided under the OTT are typically related to media & entertainment and communication. The telecom service provider whose network is utilized for OTT services has no administrative control and responsibilities for content on the OTT applications.
There has been a swift transformation in the voice, video, and OTT applications being delivered through the wireless networks. The proliferation of smartphones, with integrated advanced communication functions has revolutionized the OTT services market. Significant growth in the use of OTT services has been increasing the data usage, which thereby increases the flow of revenue for the telecom service providers.
The advent of high-speed internet has opened up new opportunities for revenue generation through OTT services for the telecom service providers. One of the primary drivers of OTT services is the adoption of cloud services. Cloud technology has enabled ‘service portability’ to the OTT service providers. Service portability features allow users to upload data and access content from any device and any place. Google LLC, Apple, Inc., Microsoft Corporation, and others are offering various cloud-based OTT services in the market.
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Over the top services are gaining traction in several industry sectors, including e-commerce, e-health, e-education, smart grids, and others. Mobile commerce is also one of the emerging areas which is gaining importance due to advances in OTT services. New players are entering the OTT services market due to massive revenue opportunities. Omni-channel retailing is another emerging market trend that is likely to drive the demand for OTT communication services.
“The Increasing Penetration of Smartphones and Digital Platforms has Fuelled the Demand for OTT Services”
According to the Mobile Economy report 2018, published by GSM Association, mobile internet penetration will range up to 61% of the global population and 86% of unique subscribers by 2025. The report also states that smartphones will become the most leading electronic device globally by 2025. These aspects represent an addressable market for digitally delivered services and content, e-commerce, and other services.
Digital platforms are a significant factor in the global economy. Some of the global digital platforms have strengthened their market positions in various sectors. For instance, Google LLC accounts for 90% of all internet searches. Facebook is the top social media platform that accounts for a remarkable market share of the global social media market. Amazon accounts for a notable share in the online retail activity, whereas its Amazon Web Services holds a similar share in the worldwide cloud infrastructure market. These aspects positively impact the growth of the over-the-top-services market.
“Growing Adoption of Online Streaming Services is Likely to Drive the Adoption of OTT Services“
According to a report by the Diffusion Group, an increasing array of virtual multichannel video programming distributor (MVPD’s) ended in 2017 with about 5.3 million subscribers. The report also states that all major TV network providers are likely to introduce standalone direct-to-consumer (DTC) services by 2022. This will drive the online streaming service subscriptions close to 50 million by 2022.
Additionally, IBM Cloud Video Report states that consumers prefer to access their streaming service through their connected televisions such as Samsung smart TV, connected Blu-Ray player, Roku, Apple TV, and others. Half of the users opted connected TV to stream video, followed by laptops at 10% of usage for streaming services. This trend continues, with 43% people using connected devices as the primary devices to watch SVOD content in 2016.
On the contrary, internet connectivity and speed issues are significant drawbacks for OTT serives specially in rural areas as compared to urban areas. Recent developments will cater to adoption of online streaming services, subsequently driving the OTT services market.
“Online OTT Services are Projected to Witness Huge Demand in the Coming Years”
By service, the market has been classified into online OTT services and managed OTT services. The managed OTT services refer to a service network, where the service providers have major control to manage their network capacity to provide services such as IPTV or pay-TV. The concept of Net Neutrality also plays an essential role in managed services. Net neutrality or network neutrality is a principle that all internet service providers should treat internet communications equally and should not discriminate based on the content, platform, website, or user.
The managed OTT services are likely to witness steady growth in the coming years owing to the availability of high-speed internet and the proliferation of electronic devices. In developing economies such as India, there would be a considerable market for managed services as people are more inclined towards traditional OTT practices such as pay-TV.
Online OTT services refer to the type of service that depends on the public internet for delivery of content. For instance, online gaming, video on demand, online music, and others are online OTT services. According to a consultation document from Indian TRAI, the examples of OTT are Viber, WhatsApp, Snapchat, Skype, Instagram, Hike, Line, Google Talk, WeChat as well as e-commerce sites such as Amazon.com , Inc., Flipkart Pvt. Ltd., and others, Ola, Facebook messenger, iMessage, BlackBerry Messenger, online video games and video on demand platform providers such as Netflix, Inc., Pandora, and others.
Online services are expected to upsurge the market growth in the coming years. The proliferation of smartphones, increasing broadband penetration, availability of high-speed internet are some of the prime factors that drive the adoption of online OTT services. Also, huge investments by OTT market players such as Netflix, Inc., Amazon.com, Inc., and others in network infrastructure and original content are likely to contribute to the growth of online OTT services.
“OTT Media Services to Witness Exponential Growth During the Forecast Period”
Based on type, the market has been distributed into OTT communication services, OTT Media services, and OTT Applications services. OTT communication services provide real-time telecommunication services such as voice over internet protocol (VoIP). The OTT communication services compete with the services offered by telecom service providers (TSP’s). OTT communication services are expected to have exponential growth in the coming years.
The rise of OTT communication services is growing with the advent of instant messaging services such as Whatsapp and I-message which has led to a drastic shift from conventional messaging services to OTT services. OTT application services comprise of commercial services such as e-commerce or financial services, internet-based social media applications like Facebook, Instagram, and others. OTT application services are expected to witness notable growth globally during the forecast period.
OTT media services comprise of video on demand and music streaming. The OTT media services segment is expected to have a remarkable growth during the forecast period. Advancements in disruptive technologies such as artificial intelligence, data analytics have enabled the content creators and broadcasting service providers to transform from primarily B2B business to B2C business.
Telecom operators progressively see content as a differentiator in terms of customer retention and acquisition to drive data consumption, whereas established telecom operators such as Bharti Airtel Ltd., Vodafone Idea Ltd., and Reliance Jio Infocomm Ltd. are looking forward to aggregate content across traditional television and OTT applications. Moreover, Reliance Jio is drawing a strategy of aggregating content and investing in the original content through collaborations and alliances with media and entertainment companies across the value chain.
“Ease of Accessibility is Likely to Make Smartphones the Most Preferred Platform for OTT Services”
By platform, the global over the top services market is categorized into smartphones, Smart TV, laptops and tablets, and others (gaming consoles). The increasing use of smartphones is expected to drive the adoption of OTT services. According to a study by Cisco Systems, Inc. in 2015, the smartphone has the maximum data consumption rate. This makes the smartphone a preferred platform to leverage online OTT services.
The use of online OTT services among generation Z and the millennials are high. As a result, there is a continuous trend of using laptops and tablets among the young generation due to which laptops and tablets are expected to be a significant platform for using OTT services followed by smartphones. The higher cost of laptops and tablets is the main reason for customers to prefer smartphones for leveraging OTT services.
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The emergence of Smart TV has led to a huge demand for OTT media services. For instance, Samsung’s Smart TV incorporates some advanced features such as online apps and games, web browser, social media application integrated with the TV. However, in 2019, Netflix, Inc. announced that Netflix streaming service could not be supported on some of the consumer electronic devices including some from Samsung, and this change will affect the smart TV models sold in the U.S. and Canada. Thus, the lack of accessibility and compatiblility of devices are expected to restrict the growth of smart TV in the OTT market.
“Asia Pacific is Predicted to Exhibit an Exponential Growth Rate During the Forecast Period”
North America is expected to emerge as a dominant region in the global over the top services market. According to a report by the Telecom Advisory Services LLC published in 2019, Netflix, Inc. and Amazon.com, Inc. are expected to invest around USD 22.0 billion on TV and film programming in 2019, compared to USD 21.7 billion in 2018 for National Broadcasting Company (NBC), CBS, an American English-language commercial broadcast television and radio network and the American Broadcasting Company. The statistics mentioned above show that substantial investments are likely to expand the OTT market size in North America.
In North America, the United States holds a major market share of OTT services owing to the high internet penetration compared to other regions with internet speed ranging from 13.1 Mbps to 14 Mbps. However, the region is expected to witness moderate growth due to the overall maturity and entertainment and media industry growth.
North America Over the Top Services Market Size, 2018 (USD Billion)
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Asia Pacific is expected to exhibit a remarkable growth rate during the forecast period. The presence of highly populated and developing economies such as India, China, and Japan would raise the demand for OTT services across the region. Netflix, Inc. is emphasizing on the development of foreign language content beyond the United States, especially in Asia Pacific and Latin America. The company perceives local language development as an essential component of local expansion. For instance, Netflix, Inc. looks forward to expanding the business footprints in Asia. Netflix announced 17 new Asian originals in 2018. Such initiatives by the market players are likely to drive the over the top service market growth across the Asia Pacific.
Europe is foreseen to witness moderate growth in the global OTT market. According to a report by European Parliamentary Research Service 2018, there has been a swift growth of the broadcast-related online services market in Europe. This is predicted to exemplify a relatively smaller market share by 2020 as compared to the number of households subscribed to cable, satellite, and telecom operator services. As a result, Europe is expected to exhibit moderate growth.
The Middle East and Africa (MEA) is projected to have a steady growth during the forecast period. Some of the local OTT players are taking initiatives towards developing OTT services. For instance, Showmax, a South African OTT platform launched in 2015, is operating in around 70 countries and is a leading producer of African based content. This generates new market opportunities for key players. Similarly, Latin America is expected to witness steady growth. Brazil is expected to be the second-largest over the top services market in Latin America, followed by Mexico.
“Key Industry Players to Focus on Strategic Partnerships and Expansion of OTT services Around the Globe”
The global OTT service market is affected by the fierce competition between the pay-TV and OTT operators, where players are not only competing within the video distribution but also with the content development.
The local OTT market players are taking active initiatives towards upgrading the OTT services. For instance, iFliix, based in Malaysia, is available in 22 countries across Southeast Asia, and the Middle East and Africa. IFllix is investing in Malaysian and other original content and is also planning to add 12 original series and 30 movies through Studio 2:15 its wholly-owned production company.
Whereas, in India local video streaming platform, Spuul announced to produce original shows whereas, other on demand platforms such as Hotstar, Voot, and Sony Liv have significantly raised the content spending when Netflix, Inc. and Amazon.com, Inc. have stepped into the Indian Market. The increasing demand for original content from local and international viewers fuels growth in the Indian OTT platforms.
Many telecom operators are partnering with the OTT players to gain benefits from their customers. Some of the examples are as follows:
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The global Over the Top Services market report highlights leading regions across the world, with an aim to offer a better understanding to the user. Furthermore, the report provides insights into the latest industry trends and analyzes technologies that are being deployed at a rapid pace at a global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader to gain in-depth knowledge about the market.
Value (USD billion)
As per our (Fortune Business Insights) study, the global market is predicted to reach USD 86.80 billion by 2026, with a CAGR of 14.3% (2019 -2026)
As per our study, in 2018, global market was valued at USD 30.23 billion, and it is anticipated to reach USD 86.80 billion by 2026 at a CAGR of 14.3% during the forecast period (2019 -2026)
Globally, spending on Over the Top Services is increasing every year. Some of the regions, such as North America, generated a revenue of USD 12.97 billion in 2018 and is expected to generate a remarkable revenue share by 2026
In the market, OTT Media service is the leading segment. Increasing demand for personalized and original content is likely to fuel the demand for OTT media services such as video on demand.
The critical driving factor of the market is the increasing penetration of smartphones and digital platforms for OTT services
In the market, some of the key players are Amazon.com, Inc., Netflix, Inc., Hulu, LLC, Google LLC, Apple, Inc., and others. These players are focusing on partnerships and mergers to enhance the OTT service offerings.
North America is expected to hold the highest market share in the Over the Top Services market
Asia Pacific is projected to witness a substantial growth rate in the Over the Top Services
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