Report: Netflix's U.S. OTT market share may fall from 85% to 50% by 2018 amid competition
Ooyala, Vindicia, and analyst firm MTM today have released a report, “Prospects for Premium OTT in the USA.” The report analyzes what the OTT market may look like through 2018 and it surveyed major content providers including FOX, MGM, ITV, Warner Brothers, DIRECTV, Miramax, LionsGate, Maker Studios, Starz, and Verizon.
The report finds that Netflix will almost certainly remain the largest single premium OTT provider in the USA (last week, FBR Capital Markets predicted that Netflix would have more viewers than any of the three major US broadcast networks).
Still, as the market continues to crowd at a rapid pace, Netflix's OTT market share is set to decline from 85% in 2014 to around 50% in 2018. OTT revenue was $4 billion in 2014, but is expected to double or triple by 2018.
Below, additional highlights from the report. The report, for those interested in the OTT and video space, is worth reading in full:
· Pricing is seen as an important challenge for niche OTT providers, given the costs of setting up a new service and the comparably-small target audiences.
· Factors that have supported the growth of premium OTT in the U.S. market:
o Wide availability of broadband infrastructure
o Consumer willingness to pay for content
o Scale and wealth of the US market
o World-leading media, entertainment, technology and startup ecosystems
o Netflix’s success in the US market
· Most industry participants believe that developing a critical mass of premium content with mass-market appeal, such as original content or early-window film and TV content, is becoming harder – existing content libraries have largely been licensed and the cost of new premium content is increasing.
· Niche services, complementing more generalist pay-TV or OTT offerings, are also expected to proliferate – industry participants envisage 15-20 specialist OTT providers acquiring 100,000 or more paying subscribers by 2018, with many more attracting smaller numbers of subscribers.
· Industry executives expect pay-TV and premium OTT to converge into a single market, with OTT distribution deals and more flexible, lower-priced packages attracting younger adults and millennials to take up services from traditional MVPDs.
You can access the Found Remote hub here. Sign up to receive The Drum's Found Remote newsletter.