OTT refers to the delivery of TV content and film through the internet without any requirement to subscribe to a conventional satellite pay and cable services, such as Time Warner Cable or Comcast. The potential of the over-the-top devices and services market is to grow and witness continuous growth on account of widespread application for smartphones, smart TV, and gaming consoles by service providers. The OTT services were previously used for the distribution of audio and video content over the internet. However, technological advances have contributed to the use of technology for video and game console applications. The adoption of OTT services with the adoption of cloud services and cloud technology had led to enable service portability of the OTT service providers. These service providers allow uploading data and accessing the content available online from anywhere to any device. The new entrants for the adoption of the OTT technology are Google LLC, Microsoft Corporation, and Apple Inc., among others. Some of the major factors determining the industry's growth are the significant growth of the media and entertainment industry and the growing demand for high-quality content streaming over smart devices. Compared to conventional cable and satellite services, OTT media services offer greater ease of access, interoperability, comfort, and functionality. Furthermore, the use of advanced services technology and the delivery of custom content have created a huge appeal for the industry, and profits are expected to accelerate over the next few years.
According to the research report, “Global Over The Top (OTT) Market Outlook, 2028” published by Bonafide Research, the market is projected to reach the market size of USD 490.13 by 2028, increasing from USD 210.13 Billion in 2022. The overall market is projected to grow with promising CAGR of 15.72% CAGR for 2023-28. Increasing adoption of OTT can be attributed to the narrow genre choices, flexibility, wider device availability, internet penetration, and overall lower costs. Furthermore, the rising demand for customized content led to significant adoption rates of OTT devices. This offered the users the flexibility to view varied content. Also, affordable rates of high-speed internet across emerging economies led to a massive increase in the adoption rates of subscription services, according to user convenience. This reflects key consumer behaviour in terms of smaller size and narrower content of OTT services, leading to wallet fragmentation (flexible payment models), thereby pushing buying decisions flexibly from the household to the individual level. Furthermore, OTT streaming media firms are attempting to provide subtitles in additional languages so that any consumer anywhere in the world can access and enjoy the content. Additionally, Netflix, Inc. acquired Animal Logic Group of Companies, an animation studio, in 2022; with this acquisition, the company looks forward to strengthening its market in the animation business.
Based on the report, the market is segmented into major five regions including North America, Europe, Asia-Pacific, South America and Middle East & Africa. In the year 2022, North America held the largest market share with over 40% in the over the top (OTT) market and is also expected to retain its dominance throughout the forecast period. The growing substantial funds and investment in content creation sector are perpetually pushing the market growth. For instance, according to the Telecom Adviory Services LLC, Amazon.com, Inc. and Netflix Inc. were anticipated to take a position in TV shows and film programming in 2019. On the basis of countries, the United States is holding the lion share in the global market in 2022. The recently entered platform suppliers in the U.S., including Disney+, Peacock, Quibi, HBO Max Apple TV, and others, are driving the market growth in this region. However, Asia Pacific is expected to achieve exponential growth throughout the forecast period. The market's growth will most likely be driven by the mature utility and broadcaster industry. Asian countries such as China, Japan and India are prepared to witness the phenomenal rise of platforms, which is expected to provide enormous potential for the region's market to expand.
North America over the top market is witnessing high growth due to the availability of high-speed internet. In the region, content generation, consumption, and distribution are disrupting television. In 2022, there were around 200 Million OTT subscriptions in the United States alone, showcasing that the internet is increasingly overtaking television as the standard way customers consumes media. Growing acquisitions and partnerships in the region are reshaping the video media landscape. Live streaming & short-form contents are witnessing a rise in demand. Viewers are spending eight times more time on live streaming in comparison with on-demand videos. In 2018, live streaming witnessed a hike, with major events such as the FIFA World Cup and Academy Awards being extensively covered. Owing to such trends, companies are experimenting with new business and subscription models for content monetization, driving the over the top (OTT) market growth. The OTT market is growing in North America owing to the presence of key market players such as Facebook, Netflix, Amazon, Microsoft, Google, YouTube, Apple, Home Box Office, Roku, IndieFlix, Vudu, and Hulu in the region.
There are three major types of Over The Top (OTT) market, such as AVOD (Advertising-based Video On Demand), SVOD (Subscription Video on Demand), TVOD (Transactional Video on Demand) and others. Subscription video-on-demand (SVOD) stands for subscription video-on-demand: SVOD, like standard pay-TV packages, allows customers to access an entire catalog of programming for a fixed monthly fee. The main factor responsible for the surge in the popularity of SVOD streaming platforms, like Netflix, Amazon Prime Video, Hulu, HBO, and Disney+, is that the user gets unlimited access to original and high-quality content on the go. Further, the pricing innovation, bundling, and availability of original premium content for access to users in the country have increased the adoption of subscription video-on-demand (SVOD) services offered by the OTT platforms. Secondly, free and ad-supported services include Roku Channel, Crackle and YouTube. Lastly, transactional services include GooglePlay, iTunes, Amazon Instant Video, and Vimeo that enables users to pay for individual pieces of content. This segment is anticipated to grow with higher CAGR by 2028.
Asia Pacific is expected to gain exponential growth during the forecast period. As per the obtained data, the region has outnumbered the OTT subscribers' list than the U.S. The significantly mature Telco and broadcaster sector is likely to drive the market growth. Asia-Pacific is anticipated to make significant contributions to the overall market expansion in the coming years. This dominance is backed by the massive population and their growing inclination toward entertainment, leaving no age bracket out of the loop. Besides, the prevalence of Bollywood and the constant release of new movies and web series, especially across countries like India, is also fuelling the demand for OTT platforms and generating lucrative opportunities for the leading players in the industry through 2027. Increased emphasis on customer experience and personalization with the help of ever-growing technology to safeguard revenue and attain growth in the long term has proved to be one of the critical drivers for the growth of the market. At a macro level, Asia has benefited from a growing middle class. A rising per capita income across the region has been accompanied by an increase in disposable income and OTT has capitalised on this trend.
On the other hand, as the OTT phenomenon spreads in the European continent, the attitudes and behaviours of its viewers are also evolving. Streaming service providers have been carefully observing the European viewing habits to leverage an OTT industry boom in the continent. In 2019, Europeans added two hours more of their time spent on video-on demand (VOD) content compared to the previous year. Europe is expected to showcase significant growth during the forecast period owing to emerging local joint ventures such as salto, Joyn, BritBox, lovesTV, and more. Broadcast media in Europe is also significantly implementing streaming options in countries such as Germany, Spain, and France. This is expected to increase the market expansion in the region. For instance, in February 2019, Netflix, Inc. launched a new European Original Series, which includes two German and One Norwegian series. The series named Biohackers, Unorthodox and Bloodride. These three projects show Netflix commitment to the European market and offer locally grounded and original stories that can touch the audience globally.
During the forecast period, the demand for OTT media services is expected to significantly grow in the forecasted period with the rise in consumer spending power, where the consumer are now preferring to purchase different subscriptions for streaming OTT services in order to avail wide range of web series, movies, live streaming and other media content on various devices such as television, smartphones, etc. Moreover, according to the data obtained, more than 660 Million households have smart TV in their homes, significantly fuelling the demand for OTT media services in the country. Many consumers are upgrading from traditional televisions to smart TVs, which offer features such as internet connectivity, streaming capabilities, and access to a wide range of online content. As of my knowledge cut-off in 2021, it is estimated that more than half of all television sets sold globally are smart TVs.
The Over-The-Top (OTT) media market in South America has been growing in recent years due to increased internet penetration and a growing demand for online content. The use of OTT services like streaming video, social media, and online gaming has become increasingly popular in the region, with major players like Netflix and Amazon Prime having a strong presence in the market. However, the OTT market in South America also faces several challenges, such as limited broadband infrastructure in some areas, low levels of internet penetration in rural areas, and a lack of local content production. Despite these challenges, the South American market presents significant growth opportunities for OTT companies as the demand for online content continues to increase and internet infrastructure improves. Additionally, the COVID-19 pandemic has accelerated the growth of the OTT market in South America as more people are staying at home and relying on online content for entertainment and information. The region's growing middle class and increasing disposable income also present potential opportunities for OTT companies to reach new customers.
However, in Middle East & Africa, the OTT video market is still evolving in terms of content and business models. However, the population and demographic across the region are highly attractive as a market for existing and new market participants. Internet penetration, supplemented by explosion of smartphones, has altered the way Middle East & Africa watches television. This growth is augmented by government initiatives on internet proliferation and large-scale digital transformation. Along with pricing, customisation and personalisation with data analytics will play a key role in defining the market leader over the next five years. The internet penetration rate in the Middle East and Africa (MEA) region varies widely among countries, but overall the region has lower internet penetration compared to other regions such as Europe and North America. According to recent data, the average internet penetration rate in the MEA region is around 50%, but this can range from over 90% in countries like the United Arab Emirates to less than 30% in countries such as Yemen. Factors contributing to low internet penetration in the region include limited access to high-speed internet, affordability issues, and limited infrastructure development in rural areas.
Based on the report, the market is segmented into four major service verticals including media and entertainment, education and learning, gaming and service utilities. Among them, media and entertainment is leading the market with more than 72% in 2022. However, education and learning and gaming segments are projected to witness higher demands during the forecast period. Online gaming companies need to reach out to a large number of global customers, avoiding the presence of limitations across the entire gaming experience. These companies aim at delivering a fast and secured online gaming experience, offering a rich media experience, and tracking the record of users that use various gaming applications. The consistent engagement of end users in the gaming sector enables companies to make notable developments across the segment in terms of High Quality (HQ) delivery over handheld devices, such as smartphones and tablets.
Based on component type, the global market is segmented into solution and services. Among these, solution segment accounted for significant market size in 2022 and it is projected to continue its growth during the forecast years. The increasing importance of solution segment in digital content distributing, digital media and broadcast management are driving the market growth. Besides solution, the market for services will grow at a notable rate over 15% CAGR for 2023-28. Based on user type, the global market is categorized into personal and commercial. In both of these, personal user type will witness higher market growth with over 65% market share by 2028. Increasing demand for OTT services to provide personalized experience is driving the market growth in the forecast years. However, commercial user type is expected to grow with higher market growth. Based on content type, the market is categorized into video streaming, game streaming, audio streaming and communication. The video streaming segment is expected to dominate with a remarkable growth during the forecast period. The growing number of platforms offering live-streaming such as concerts, sports, online gaming, and music streaming, among others, along with the video-on-demand services, is likely to fuel the demand for this segment.