Over-the-Top TV Revenue to Top $5.6 Billion by 2014

Dramatic Growth in Diffusion of Broadband-Enabled TVs Will Drive Use of On-Demand Internet Pay-per-View Services

DALLAS, TX — According to a new report from The Diffusion Group, revenue from the delivery of Internet video to the TV will grow nearly six-fold in the next five years, from a meager $1 billion in 2009 to $5.7 billion in 2014. These forecasts are part of TDG’s latest digital media analysis, Broadband-Enabled TV: Rise of the OTT Provider, authored by TDG senior partner and digital video expert, Colin Dixon.

Dixon posits that in 2009, pay-per-view services will account for 96% of global OTT revenue, leaving subscription revenue with only 4% of the revenue mix. By 2014, however, annual OTT subscription revenue will have grown 50-fold and account for 31% of global revenue.

Dixon points to current hardware trends as fueling this growth, specifically the ongoing shift to broadband-enabled TVs and the rapid diffusion of ancillary web-enabled platforms such as game consoles, Blu-ray players, and hybrid set-top boxes. Widespread penetration of such platforms will set the stage for a rapid uptake of Internet-to-TV video services, both pay-per-view and subscription-based.

As these platforms more widely diffuse and consumers become more comfortable with using Internet-based TV services, the market will be primed for the arrival of full-fledged PayTV replacement services. Subsequently, TDG expects major OTT service announcements in virtually all global regions in 2010 and 2011, both in terms of stand-alone OTT and hybrid PayTV/OTT TV services, both of which will help fuel growth in OTT subscription revenue to $1.8 billion worldwide by 2014. At that time, North America will account for the vast majority of global OTT subscription revenue ($830 million) followed by Asia ($490 million), and Europe ($407 million). Other global regions will collectively account for only $60 million of this total.

Broadband-Enabled TV: Rise of the OTT Provider is the first of a two-part report series by Colin Dixon on the emerging opportunities associated with Over-the-Top video services. The initial report analyzes and forecasts global demand for Over-the-Top (OTT) services, and revenue associated with both pay-per-view and subscription video services, as well as the diffusion of broadband-enabled TVs. The second report in the series will provide forecasts for a variety of web-enabled video platforms including game consoles, Blu-ray players, hybrid set-top boxes, Internet extenders, and others.