ABI Research predicted that live linear OTT video services will grow to about $7 billion in global revenue by 2021, up from about $1 billion in 2016.
"These services meet the consumer demand for anytime, anywhere programming and mobile-centric viewing while targeting a larger national audience," said Sam Rosen, managing director and vice president at ABI Research, in a statement. "The services fit within carriers adopting mobile-first mindsets as mobile subscriber bases and revenues exceed fixed line revenues, largely due to per-consumer as opposed to per-household connections. This helps win the battle for exclusive content rights but poses strong technical challenges."
While the report pointed specifically toward DirecTV Now as the latest virtual MVPD to be launched by a traditional pay-TV provider, other vMVPDs from less traditional providers and content companies like Hulu and Google are also coming in the near-term.
ABI Research noted all the technical hurdles these services would need to overcome prior to launch, including the development of content management systems, video transcoding and storage pipelines, application ecosystems and video distribution networks.
ABI said with those technical challenges in mind, many operators are making significant investments in technology platforms. AT&T/DirecTV bought Quickplay Technologies to help with its OTT launch, and Disney took an equity stake in BAMTech to “have better strategic control over its syndication platform.”
"Despite the technical challenges, OTT services help pay-TV operators attract cord-cutters with a cheaper pay-TV alternative, as well as next-generation customers who never planned to subscribe to a traditional pay-TV service," said Khin Sandi Lynn, industry analyst at ABI Research, in a statement. "Live OTT services, particularly sports packages, continue to gain the most traction, as they allow customers to watch the same live programs that they receive through pay-TV services at a fraction of the cost."