The term “over-the-top” may not be immediately familiar when applied to television—some here might even think it's a reference to content that's too zany, violent, or racy for anyone's own good—but in this context, it's the term for television provided through subscription services, often on a streaming basis. Services like Netflix and Hulu fall into this bracket, and a new report from Juniper Research (News - Alert) says that by the time our next president is a little more than halfway through the administration, the market for over-the-top (OTT) will increase four times over.
The numbers tell a staggering story: in 2014, the OTT market brought in a little less than $8 billion in subscriptions, but by 2019, that number is expected to come in at $31.6 billion, roughly four times 2014 levels. This move is brought about by a combination of factors, including continued strong growth in the North American and Western Europe markets, and by the entrance of new players in the Far East and Asia Pacific markets taking advantage of huge numbers of potential viewers.
Another major driver expected to boost OTT rates is the rise of the 4K video phenomenon. Some major names have already brought 4K into use, like Netflix and YouTube (News - Alert), and other services are expected to follow in short order. With the rise of more content sources, some suggest hardware sales will be greater encouraged, driving prices down. The report expects connected televisions to represent over 84 percent of OTT subscriptions by 2019, and IPTV (News - Alert) revenues will more than double in the time frame between 2014 and 2019.
One key point of concern here, however, is for network operators. With users clearly losing interest in cable television, that's a major revenue stream about to buckle. Meanwhile, demand on the network is about to skyrocket, all but requiring expensive expansion projects lest an opportunity be made for fiber-to-the-home (FTTH) providers like Google (News - Alert) Fiber to step in with faster, better, less limited service.
The picture is becoming clearer with each passing day. Regular viewers are increasingly frustrated with but-thou-must bundle packages that require a user to buy a package with a host of channels just to get the few they actually wanted. Content providers, meanwhile, are likely less than enthusiastic about dealing with cable providers after years of fights over fees, and thusly might have an interest in going straight to the viewer with the complete package. That's a match made in heaven for viewers and providers, but it leaves the network operator in a bad position, losing one key revenue stream and forcing expensive development to maintain another. With a growing array of options like Sling TV stepping in, giving consumers more choice encourages a move away from standard cable toward streaming services.
It will be interesting to find out if the network providers will see the writing on the wall and play ball, or if they will throw up collective hands and have nothing to do with providing the video users want. This could be a very big change in the making, and it may just determine who has the best shot at winning the living room.