Amazon will overtake Netflix to generate more over-the-top (OTT) video revenue in 2018 thanks to its “growing array of ways to pay for video,” according to Ovum predictions.
The research firm said that Amazon’s combination of subscriptions, digital rentals, electronic sell-through and bundles of TV apps will see it generate US$5.8 billion in video-related revenue next year.
It expects Netflix, which led the pack in 2017, to generate US$5.3 billion in revenue through its subscription-only model.
“Arguably, the e-commerce giant is ‘cheating,’ as Ovum’s estimates count fees from Amazon’s ever-growing Prime bundle. But maybe that’s the point. Rules are meant to be broken and Amazon is the most daring offender,” said the Ovum report.
It also claimed that despite the hype, Netflix still won’t have a majority of OTT video subscribers in at least 19 countries by the end of 2018, with local providers to hold the top spot in various markets – such as Ipla in Poland, Showmax in South Africa and Iflix in Indonesia.
Among its other consumer and entertainment service predictions for 2018, Ovum tipped Apple to launch a new premium OTT video offering, initially in the US, as its share of US online video revenues via iTunes sales declines to less than 4% in 2018.
It also said it expects Facebook’s ad-supported Watch video platform to go international next year, but to have “minimal” global impact.
“While we expect Watch to roll out internationally next year, Facebook’s share of global AVOD revenue will remain negligible in 2018,” said the report.
“Facebook must attract compelling local content, refine its video ad experience, and offer more robust and reliable ad metrics before it can truly compete with YouTube and other premium AVOD platforms for consumer attention and advertiser spend.”
Overall, Ovum expects Netflix, Amazon, YouTube and other online-only services to account for 18% of total paid and ad-supported TV and video revenues next year and 60% of growth.
The research firm predicted that “few trends will be bigger in 2018 than the transformation of TV and video by over-the-top technology and services” and said that in the US OTT will take “an astonishing 98% of growth”.
In the US market, Netflix, Amazon, Google and Facebook are expected to account for 9% of total US TV and video revenue and 64% of revenue growth in 2018.