A new study predicts the over-the-top video market will grow at a CAGR of 32 percent, topping $16.4 billion by 2016.
The IMS Research study, Over-the-Top Video-Service Delivery & Business Models, says the market will be led by subscription services like Netflix and Hulu Plus, which will account for 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 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.
Hunt also said she expects more mergers and sales of OTT services like Hulu, as companies like Google (NASDAQ:GOOG), Yahoo and Microsoft (NASDAQ:MSFT) look to convert their free OTT viewers into paying customers.
"Mergers with--and sales of--successful OTT services are going to become more common as Internet giants and large retailers seek to establish a global pay-OTT presence and compete with the likes of Netflix," she said. "We're already seeing some of this with Amazon's LOVEFiLM acquisition and the recent move by UK's Tesco to acquire Blinkbox."
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