The Boston Consulting Group (BCG) study claims that over-the-top (OTT) video is growing by more than 20% annually and winning share over traditional TV, which is seeing revenues grow at a “far more subdued rate” of 2%.
“The biggest impact of the OTT market on the television and film industries is the removal of barriers – strategic, economic, and national – to the distribution of video content,” said John Rose, a senior partner at BCG and a co-author of ‘The Impact of OTT on Video Production Around the World’ report.
“The demand for quality video content from consumers, and the number and variety of new services that OTT enables for meeting this need, is both increasing the market value of content and destabilising the roles and market values of linear networks and traditional aggregators.”
Despite the removal of barriers and heightened competition, BCG claims that the rise of OTT has produced a market that is, in many ways, “more financially concentrated today than it was in the traditional TV ecosystem”.
According to the research, approximately half of the US$25 billion of annual OTT market revenues are controlled by five “behemoths” covering both ad-supported and subscription models – Facebook, YouTube, Netflix, Amazon and Hulu.
In total, BCG estimates that the global OTT market supports roughly 500 players, though most are focused on a single domestic market.
Germany’s Maxdome and Southeast Asian service Iflix were singled out as two examples of local success stories. However, BCG cautioned that “gaining traction has been a struggle for most domestic-only players”.
“In only a few of the markets where Netflix is present has a local player gained more than 25% of the subscription-supported market,” according to the study.
On the content side, the report claims that OTT has driven a “surge in the volume of high-quality production”, with the number of original productions in the US alone rising from roughly 200 in 2009 to more than 400 in 2015.