Vindicia report: premium OTT growth will be fueled by local players

Premium OTT is set to grow strongly in western Europe and other global regions over the next three years as connected consumers embrace not only services from global OTT players, but new subscription services from local and regional broadcasters and direct-to-consumer services from content brands, according to a new report by MTM for Amdocs owned subscription management specialist Vindicia,

The UK will remain the largest market for premium OTT in western Europe, with revenues forecast to rise from US$1.18 billion (€1 billion) in 2017 to US$1.63 billion by 2020.

In the US, premium OTT subscription revenue will surpass US$21.2 billion by 2020, up from US$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 gain customers, according to the report.

Revenues from premium OTT services will also grow rapidly in Asia Pacific, albeit from a low base in some cases, according to MTM. Thailand, 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, already one of the largest in the Asia Pacific region, will continue to see growth, with revenues reaching US$420 million by 2020, up from US$280 million in 2017, the study found. Netflix will be the dominant subscription service in Australia for the foreseeable future.

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