Study says OTT service market to reach $16.4B by 2016, pinch pay-TV operators

Earlier this year, Shane O'Neill, Liberty Global's chief strategy officer, called over-the-top services "an existential threat" to cable operators during the told Cable Congress in Lucerne.

"We need to innovate much more quickly than we have traditionally done," he said. "If we don't, OTT could be a big, big thorn in our side."

That thorn has grown, according to a new report from IMS Research that predicts a world service OTT market of $16.4 billion by 2016, with a CAGR of 32 percent.

And it predicts the growth will be led by subscription services like Netflix and Hulu Plus, which will account fro the largest share of OTT service revenues through 2016.

Anna Hunt, CE principal analyst at IMS Research, said Netflix's just-announced expansion into Latin America and the Caribbean "illustrates the type of strategic initiatives we can expect from leading local OTT service providers" as they look to expand their market.

"New deals for Spanish and Portuguese language content create a potential for Netflix to expand its market reach to the vast population of the whole Latin American region, as well as millions of Spanish speakers living in the U.S.," she said.

It's not just subscription services that will see big gains in the next five years, Hunt said. She expects brick and mortar retailers like Walmart and Best Buy, as well as Hollywood studios and other content owners to benefit as well, as pay-per-view transaction revenues grow at a faster pace. IMS Research projects that retailers will grow their share of the OTT market, accounting for 13 percent of world OTT service revenues in 2016.

For more:
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