Home Industry Market Steady rise in online video revenues

The global online video market is predicted to continue a steady rise to be worth US$37 billion by 2017, driven by the popularity of services like Netflix and YouTube.

In a new report out today, Informa Telecoms & Media says the forecast revenues will come from advertising, subscriptions and transactions.

Informa's Giles Cottle, principal analyst and author of the report, says that despite the online video market maturing, advertising will continue to be a larger revenue generator than subscriptions in 2017, as it is this year.

According to the report, online video remains a small, but growing, proportion of total TV and video revenues, with Informa estimating that it will account for eight percent of the revenues by 2017 and, by the end of the decade, if current growth rates continue, it will account for over 10 percent of revenues.

However, Cottle says its value in the market today is concentrated among only a few players.

“It’s clear that online video, today, is worth much more than the digital cents and dimes of yore, and is attracting real, and growing, revenues. But this value is concentrated around a select few players.

“We estimate that Apple, Google, Netflix and the global broadcasters (including Hulu), combined, account for about 70% of all online video revenue today– so if you aren’t one of these players, then the chances are you aren’t making a great deal of money from online delivery today.”

As well as a growth in consumption, Informa says that revenues will be driven by publishers and operators monetising content on devices beyond the PC, such as tablets and connected TVs.

“From an advertising point of view, live online video content, which is not being monetised today by most providers, will also drive the market, and pay-TV operators will also have a key role to play,” Cottle says.

 “The big change to the OTT revenue mix will come when operators start to offer not just low-cost online services, like Sky’s Now TV, but stand-alone online versions of their services that come close, in terms of content availability and price, to their core Pay TV services today. Even very modest take-up of these services will completely distort the online video market.”

US dominance of the global online video market is predicted by Informa to wane over the next five years, but Cottle says the US will still contribute over half of all revenues in 2017.

“The US accounts for approx 75% of revenues today, but that will drop to less than 60% in 2017 as Europe and Asia grow more quickly. Business-model wise, advertising will still be the largest revenue stream in 2017, as it is in 2012,” Cottle concludes.

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Peter Dinham

 

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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