777 million global OTT subs expected by 2023

According to a report from Ooyala, there will be more than 777 million global over-the-top (OTT) subscription video on demand (SVOD) ...

According to a report from Ooyala, there will be more than 777 million global over-the-top (OTT) subscription video on demand (SVOD) subscriptions by 2023, more than double from 2017.

While there's a limit to how many SVOD services users are ready to pay for, it is far from being reached, the company says. The limit may continue to rise, especially as younger consumers - who see streaming as the norm - grow older. The report indicates that viewers of all ages are increasingly adopting streaming services as their primary source of TV content.

The lesson for traditional broadcasters, Ooyala says, is to adopt the mindset of a diversified media company as more programmers and distributors are joining, rather than fighting, the push into OTT.

"Subscription and ad-supported OTT services are steadily replacing traditional content delivery, and there's no end to the opportunity to create connections with a global audience," said Ooyala Principal Analyst Jim O'Neill. "OTT is not traditional TV. It thrives upon consumer choice, often random interaction, and the convenience of viewing when, where and on what device a consumer chooses. It thrives upon its own ability to iterate in order to respond to the changing conditions of the new TV environment."

Among the findings:

  • While Baby Boomers and the Silent Generation - those born before World War II - remain the lifeblood of traditional broadcasters, they too are increasingly adopting OTT and VOD platforms. Among adults 50-64, OTT viewing increased 45% between 2016 and 2017; among adults 65+, viewing was up 36%.
  • The year 2018 saw a record 495 scripted shows available to U.S. audiences, according to FX Networks Research, and that number is expected to hit 525-550 in 2019. The Disney/Fox and Comcast/Sky mergers are expected to result in a combined spend of $43 billion in new content - 20% of global spending.
  • Some estimates say video could make up as much as 90% of all 5G mobile traffic. For OTT, that means faster and smoother delivery of video, no buffering, higher resolution, and a better experience for users; for ad-supported VOD companies, it is expected to foster the collection of better data that could be used to better personalize advertising.
  • While mobile viewing soars, screen size still matters to the majority of consumers. Some 40% of U.S. consumers who replaced a TV between October 2016 and October 2018 said they wanted to purchase a bigger screen, per The NPD Group. And consumers are going all-in on 4K/UltraHD, driven largely by SVOD services like Netflix and the promise of 4K and UltraHD content from major sporting events, like the Winter Olympics and FIFA World Cup.

"Content owners have seen a massive increase in the demand for their products," said O'Neill. "That will continue as OTT services push out across the globe and original content maintains - and grows - its value. It's becoming increasingly important for media companies - both big and small - to closely monitor and control the content supply chain."

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