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OTT revenues tipped to grow by 26% this year

netflix Bedroom_Device_shot1-0043_V_Final_0000_L_play_onb2Over-the-top video should see total revenue growth of around 26% in 2015 with a 24% compound annual growth rate (CAGR) through to 2019, according to ABI Research. 

The study claims that tapping into OTT’s growth is “key for pay TV,” with the rising popularity of services like Netflix and HBO Go causing customers to start demanding a similar experience from their pay TV subscriptions.

At the same time, the pay TV market forecast for only 3.7% CAGR through 2020 after struggling with increasing customer churn and maintaining ARPU, according to ABI.

“Comparatively high priced pay TV bundles are losing customers to more inexpensive, IP-delivered content,” said ABI Research analyst Eric Abbruzzese, who claims that operators can combat this by using IP-capable hardware to deliver similar experiences to third-party OTT service providers.

“Operators that are first to market with new set-top box technologies can expect strong returns – as much as 10% higher ARPU than with legacy technology –while those introducing the technology later will struggle to see similar success.”

“While pay TV will continue to hold market majority going forward, the best chance for positive growth in the pay TV space lies in the implementation of OTT capability in both standalone and IP-enabled STB capacities,” said Abbruzzese.

ABI claims that supporting multiscreen features has become “nearly compulsory” with the ever-increasing focus on mobile device usage, and that this is more easily done with the release of advanced IP-enabled set-top boxes.

“Those that have already embraced these ideas—notably Comcast, Dish Network, Liberty Global, and BSkyB—are on track to see future growth in a slowly declining market,” said ABI.