Uptake for over-the-top (OTT) video services like Amazon Prime, continued connected device proliferation and the worldwide push into digital content and TV Everywhere by pay-TV providers, are all conspiring to spur the market ahead significantly for online video platforms (OVP)—as in, investment in this space is set to double by 2019.
An analysis from Frost & Sullivan, Analysis of the Global Online Video Platforms Market, finds that the market earned revenue of $369.4 million in 2013—and that is estimated to reach $800.2 million by 2019. That will come from twin drivers: the obvious ongoing push by media and entertainment (M&E) companies to economically deliver video to a fast-growing set of fragmented, video-enabled consumer devices; and, on the enterprise side, as video rapidly becomes a critical means of stakeholder communication and collaboration for businesses globally, many of whom are embracing the bring your own device (BYOD) trend.
“Enterprises are increasingly experimenting with video as they realize its power as a communications tool,” the firm said in the report. “For broadcasters and pay-TV operators, the demand for high-quality, TV Everywhere services and the growing subscription and ad revenues from online video make it a profitable segment of their business. Growing investment in bandwidth worldwide offers added incentive to leverage video to grow revenue and customer loyalty.”
On the M&E side of things, an all-out content war is underpinning a rush to investment.
"As more niche content finds its way online and intense competition causes customers to differentiate on content selection, time to market, and quality of experience, OVPs will be critical to ensure business success for M&E firms," said Frost & Sullivan digital media industry analyst Anisha Vinny. "The inability of M&E organizations to handle the complexity of publishing video online is particularly fuelling the demand for OVPs that can manage and monetize video assets."
Overall, the market is set to grow at a compound annual growth rate (CAGR) of 13.7 percent over the next six years. The North America and Latin America market will lead the way, followed closely by Europe, Middle East, and Africa and Asia-Pacific.
Over the past year, the Scandinavian and Latin American regions have shown huge potential for growth in particular, Frost said—but others face notable obstacles.
“Where budgets are constrained and in regions where the economy has yet to pick up, OVP deployments are slower, which in turn makes home-grown solutions or YouTube popular substitutes,” it explained. “Security concerns around handling branded intellectual property (IP) in the cloud, and the lack of enterprise-wide video strategies, also present challenges.”
In addition, there is also confusion around what constitutes an OVP owing to the number of features, including transcoding, digital rights management (DRM), analytics and multi-platform delivery. From a customer's perspective, comparing various product features, pricing and deployment options is complicated. This lack of market awareness around exact capabilities of an OVP makes consumer education and the right messaging critical.
"Investing in tighter technology partnerships to provide customers with value-added services and critically analyzing product portfolios to make partner versus acquire decisions will be key to maintaining a competitive edge in this market," noted Vinny. "Even if they do not cultivate a strong local presence, OVP vendors must at least invest in building relationships with reseller channels in Latin America, the Middle East and Asia-Pacific to widen their market scope."
As a result, offering analytics, metrics and personalization that enable companies to derive value from their video assets will help OVP vendors differentiate themselves in the evolving market, Frost concluded.
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