Vindicia report sees massive global growth in OTT subscription revenue

Thursday, September 13th, 2018
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New Study Commissioned by Vindicia Sees Massive Global Growth of Premium OTT Subscription Revenue

  • Consumer demand for premium OTT services in Western Europe, USA, Latin America and Asia Pacific will be driven by local, live and linear content, and enabled through seamless payment solutions

SAN MATEO, Calif. — Vindicia, an Amdocs company (NASDAQ: DOX) and a leader in business-to-consumer subscription management solutions, today released a new research report that explores the prospects and development of premium OTT services across four regions: Western Europe, USA, Latin America and Asia Pacific. The research, conducted by MTM on behalf of Vindicia, found that premium OTT subscription revenue will continue to rise quickly across all regions and that growth will be fueled by local, live and linear content, as well as by easier payment solutions.

The report titled “The Prospects for Premium OTT” reveals that premium OTT in Western Europe will grow strongly in the next three years, as connected consumers embrace not only services from global OTT players, but also new subscription services from local and regional broadcasters, and direct-to-consumer services from content brands. The UK will remain the largest market for premium OTT in Western Europe, with revenues forecast to rise from US$1.18 billion in 2017 to US$1.63 billion by 2020.

In the U.S., premium OTT subscription revenue will surge past US$21.2 billion by 2020, up from $16.4 billion in 2017. While Netflix, Amazon and Hulu will continue to dominate, direct-to-consumer offerings from the likes of Disney, specialist services such as Crunchyroll and WWE, and live sports delivered via OTT will also flourish.

Revenues from premium OTT services will also grow rapidly in Asia Pacific, albeit from a low base in some cases. Thailand, for instance, will see revenues rise from US$66 million in 2017 to US$108 million in 2020, while Indonesia will expand from US$26 million to US$72 million in the same period. The market for premium OTT services in Asia Pacific will be driven by pan-regional players, such as HOOQ, Viu and iflix, that focus on local content and are priced for local audiences.

The premium OTT market in Australia is one of the largest in the Asia Pacific region and will continue to see considerable growth, with revenues reaching US$420 million by 2020, up from $280 million in 2017, the study found. Netflix will be the dominant subscription service in Australia for the foreseeable future.

In Latin America, improved broadband connectivity is driving growth in premium OTT subscriptions, where local content offerings are bundled with internet access. However, greater connectivity is also encouraging content piracy. Mexico will become the largest market in Latin America for premium OTT services by 2020, with revenues forecast to reach US$678 million, up from US$410 million in 2017, according to the report.

“As revenues for premium OTT services increase in all regions and the global players continue to dominate, a common thread to this research is that consumers will nevertheless choose to subscribe to niche content when the price and the experience are right,” said Kris Nagel, Head of Vindicia, an Amdocs company. “As part of that experience, consumers will demand frictionless payment solutions. Premimum OTT services that offer local, live and linear content, and that can also seamlessly integrate with payment platforms to make payments almost invisible to the user, can expect strong subscription growth going forward.”

“The demand for high-quality paid-for video services delivered via OTT is growing in all regions of the world,” added Nick Thomas, Associate Director at MTM and author of the report. “While it is important to understand local and regional trends, industry executives in all markets now recognize that exclusive content, appropriate pricing and seamless payment solutions are all key to acquiring new subscribers.”