OTT set to grow but will disrupt existing businesses

The value of the global OTT video business is set to grow to about US$15 billion (€12 billion) by 2016 form US$2-3 billion today, potentially benefiting telcos and rights owners but threatening established pay TV operators and broadcasters, according to a report by Arthur D Little.

The authors of Over-the-top Video: “First to Scale Wins” argue that OTT could threaten to disintermediate traditional broadcasters and accelerate the decline in physical media sales.

Arthur D Little argues that OTT video will grow to equal the size of today’s in-store video rental market by 2016. However, it says, OTT distribution of films has not so far compensated for the decline in revenue from physical media as VOD prices in the US and France, for example, are on average four to nine times less than for DVDs. The industry is also suffering from “value destruction” within individual segments as DVD prices continue to decline and the premium from Blu-ray fails to make up the difference.