North American OTT revenues to reach $20B in 2016, ad revenues to soar

A recent study by ABI Research suggests that the over-the-top video industry could top $20 billion in revenues in North America by 2016. Some two-thirds of it, or $13.3 billion, will come from advertising, much of it being retasked from traditional television.

"The biggest piece of the market that we predict will be there in 2016 is the advertising piece," Sam Rosen, ABI's senior analyst, told FierceOnlineVideo. "We think over two-thirds of that $20 billion figure will be advertising revenue. And we think in some ways it will come out of the TV advertising revenue world into the OTT advertising revenue world as the content shifts."

OTT subscriptions, he said, would be the next most significant component.

"Some of these revenues are new OTT entertainment spending, while many represent a shift of classification from other platforms, including TV advertising moving with the viewer to OTT, Internet advertising being displayed on the TV in pre-roll advertisements, or entertainment dollars moving from retail movie sales or traditional movie rental fees," Rosen said.

The study also forecasts a growing audience for online video viewers, with more than 1.3 billion viewers expected by 2016, up from a current 2010 base of just over 780 million.

"Over time, more viewing of YouTube and historically Internet-based platforms will shift to the living room, opening up significant advertising revenues," said Rosen. "This trend will be accelerated based on YouTube's recently announced increase in VOD content."

Netflix is the current leader in OTT revenues, as it has led consumers to embrace long form broadband video on their TVs with support in nearly every Smart TV platform. Hulu and iTunes each represent about 15 percent of the current OTT market.

For more:
- see this release

Related articles:
In-Stat: Interest rising for OTT on TV
IMS Research: Operator OTT services on the rise
Trender: 7 percent will choose OTT video or hybrid over pay TV

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