By 2019, a mere four years from now, subscription revenue from OTT providers like Amazon (NASDAQ: AMZN) and Netflix (NASDAQ: NFLX) will reach $31.6 billion, four times as much as it did in 2014, when revenues worldwide for SVOD (subscription video on demand) providers totaled $8 billion.
And according to the new report published by Juniper Research, more than 84 percent of over-the-top TV subscriptions will be made via connected TVs.
North America and Western Europe will see continued growth despite being well-established OTT markets. But it's the Far East, China and the rest of Asia-Pacific that will drive revenues upward, the report says.
Ongoing addition of 4K, or Ultra HD content and the falling price of 4K TVs will also have an impact.
"Netflix added its 4K offering to its highest priced subscription package last year, demonstrating the belief that consumers are willing to pay for higher quality content, while OTT providers are gaining recognition as being the first to supply viewers with content in this new format," Juniper said in a release announcing the report. "Meanwhile, 4K TVs will continue to become more affordable, accelerating hardware take-up."
While the forecast may seem to spell doom and gloom for broadcasters and pay-TV providers, there is a bright spot amid the clouds, Juniper notes. IPTV operators will see their revenues double between 2014 and 2019 thanks to their commitment to offering triple- and quad-play services.
Verizon (NYSE: VZ) is among the IPTV operators signaling that they'll continue to leverage their existing infrastructure to bring in revenue while keeping potential cord cutters in the fold. The company introduced a new "Custom HD" bundle late last week, which allows its FiOS customers to add "channel packs" built around different themes like sports, kids' content, lifestyle, and so on to their basic 45-channel service. (That may sound familiar to Sling TV subscribers, who can choose from four different add-on channel packs at $5 apiece.)
Other operators have added "skinny" bundles of their own, designed to keep subscribers who are looking for the best of both worlds--cable's lean-back ease of use combined with SVOD providers' watch-anywhere, anytime capability.
Total subscription revenues by region, by 2019. (Source: Juniper Research)
- read the press release
Verizon's Shammo: We believe our 'existing contracts' allow skinny bundles
Dish's $20 OTT price point a glimpse of TV to come, analysts say
AT&T packs $40 skinny bundle targeting cord-cutters