The total over-the-top (OTT) video market in Europe was up 51 percent YOY, reaching $3.2 billion in 2013 and is expected to grow an additional 43 percent this year, surpassing $4.5 billion in revenues. Lead by Netflix, the SVOD market experienced strong growth during 2013, up 133 percent, and it is estimated to see the largest growth across all business models, nearly doubling by year-end 2014.
To be totally honest, the introduction of 3D television was an anticlimax. Moreover, the initial forecasts for the upcoming adoption of 4K or Ultra-HD video were overly optimistic.
While 4K will ultimately reach the mainstream consumer, it will remain a niche market for another five years.
Pay-TV in North America has been on a roller coaster ride during 2013 and into the first half of 2014. In the second half of 2013, and continuing into the first quarter of 2014, total tracked subscriptions in the U.S. increased at a modest rate. In the second quarter of 2014 the trend reversed, with total tracked subscriptions declining by 276,000. Digital subscriptions have continued to increase as cable operators move forward on transitions and IPTV vendors have continued to grow their subscriber bases.
U.S. market digital subscriptions increased by 239,000 during the second quarter, moving past 93 million total.
Rosy forecasts for consumer use of 4K or Ultra-HD video are overly optimistic, says TDG. While 4K will ultimately reach the mainstream, it will be a niche market for five years, with widespread viewing of 4K content arriving in 2019.
OTT streaming video will be the short-term driver of 4K, and pay-TV operators will likely follow.
With 19% of millennials living without pay-TV and 98% of those saying they have no intention of getting it, pay-TV providers are in for a tough time convincing them otherwise. These young viewers have grown up in the interactive world of the Internet and mobile phones.
The passive television experience is simply not interesting to them.
Over-the-top (OTT) video entertainment services such as Netflix, VUDU, and M-GO, which exclusively distribute content over the Internet, are more eager to embrace 1080p and Ultra HD for connected consumer electronics devices.
Meanwhile, pay-TV distributors are more likely to settle for 720p for their “TV Everywhere” offering.
Since the end of the depression in 2009 typical U.S. family income has fallen 6% in real terms. During the same period the amount paid by consumers for pay-TV has increased in price between 12%-20%, and programming costs much more than that.
Under these conditions an economic cord cutting increase looks to be inevitable.