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What the Expanding OTT Market Means Right Now

by Pip Ngo · October 20, 2016 · Comments

New data says television is shifting — existing over-the-top (OTT) usage is growing and the demographics of adopters continue to expand. We dove into some of the recent research to see what it all means.

This isn’t the first entertainment revolution

As the story goes, in the 1970s, Ted Turner just wanted to watch baseball. He was trying to see his Atlanta Braves play while vacationing many states away, in Massachusetts. His solution: beam Atlanta’s WTCG feed via satellite to local stations around the country. It was America’s first basic cable network. And it ignited a total shift in TV culture, which had been completely dominated by three major broadcast networks (NBC, ABC, and CBS). Alongside another unknown pay-TV network — HBO — Turner’s fledgling upstart network created a new audience that would eventually fuel a billion-dollar media empire, changing the way consumers watched entertainment for decades.

Today, another revolution in content distribution and consumption is well under way. And the market again is ripe for a new generation of Ted Turners to seize the opportunity and create their own audiences and media businesses. The key difference? To start your own channel today, you don’t have to be friends with a satellite company and negotiate a multimillion-dollar deal. With accessible OTT technology, the barrier to entry for savvy creators and media entrepreneurs has been drastically reduced.

What does that market opportunity look like right now? Let’s see those numbers.

The OTT market keeps growing

OTT television currently represents $25 billion in annual revenue, and the majority of that is generated by four major US players – not unlike the domination of TV by broadcast networks up until the 1970s. A recently released Boston Consulting Group study on the future of television puts some market trends in perspective: 

  • In 2000, OTT and online viewing represented 2% of global video consumption, compared with traditional TV’s share of 98%. 
  • By 2020, OTT will represent 32% of global video consumption. 
  • OTT is now growing by 20% annually, compared with traditional TV’s anemic annual growth rate of 2%.

Niche audiences are adopting quickly

OTT growth doesn’t just mean more teens. An SNL Kagan report shows a general broadening of OTT adoption across all generations:

  • Between Q3 of 2014 and Q1 of 2016, the share of paid OTT services subscribed to by baby boomers shot up from 26% to 34%. 
  • In that same time frame, the percentage of boomers with more than four paid OTT subscriptions went from 13% to 20%. This generation is not only adopting OTTs, but paying for multiple services on top of (or in lieu of) cable bundles.

The general message here is that not only is the size of the OTT pie increasing dramatically, but also the types of interested consumers are diversifying. This means big opportunities for niche networks across many demographics. 

Speaking of niche, the Boston Consulting Group study points out a fascinating trend: Netflix and Amazon are pushing to create global hits that speak to the broadest possible audiences. Which means there’s a hole in the OTT market for “hyperlocal” content that speaks to the demands of geographic regions and their expats.

Just as cable networks overturned our idea of broadcast television, the OTT market is poised to eclipse traditional entertainment channels. And we are very excited to see what all the new “Ted Turners” will be creating.

Get in touch if you’re ready to launch your own OTT channel. Or read up on all of the challenges and opportunities of building OTT technology from scratch.