The Market For OTT Video Services Is Near Saturation

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In its latest report “Q4 2015 State of Video: Monetization, Audience, Platforms and Content”, market research firm eMarketer predicts that by 2019, 72.1% (199.6 million) of US Internet users will use over-the-top (OTT) video services compared to 69.7% in 2015. This shows that the market for OTT video services is near saturation in large part due to dominant position of YouTube in this field. But for various other players in this market there still seems to be room for growth over the next several years despite the high YouTube penetration, according the eMarketer.

What is OTT?

OTT video refers to digital video content that is delivered via the Internet, without requiring users to subscribe to a traditional cable or satellite pay-TV service like Comcast or Time Warner Cable. From a revenue standpoint OTT video services can largely be broken down into three different revenue models: SVOD (subscription-based services such as Netflix and Hulu); AVOD (free and ad-supported services such as Crackle and Hulu); and TVOD (transactional services such as iTunes, Vimeo On Demand and Amazon Instant Video) that allow users to pay for individual pieces of video content.

OTT Video Service Penetration

There is little if any room for YouTube to grow beyond its current market penetration of around 94% in the next 4 years. eMarketer predicts that YouTube’s user base will grow from 170.7 million users in 2015 to 187.8 million users in 2019. Netflix, according to eMarketer, will increase its share of OTT video service users to 71.7% in 2019, up from 63.2% in 2015. During that same period, Amazon will grow to 44.4% from 36.0%, and Hulu will climb to 41.2% from 33.1%.

OTT video service stats