Programmatic TV advertising is still in its infancy due to limited buyer and seller adoption and lack of standardization of technology and infrastructure. Though it accounts for less than 1% of all TV ad spending, some predict it could be a multi-billion dollar industry within 12 to 24 months, according to eMarketer.
The high price of cable pay-TV packages in the United States is justified in part by the huge number of channels they include. This model operates under a system where popular channels are bundled with a host of less popular ones. The new alternative is a low-cost on-demand OTT video subscription service, such as Netflix or Hulu.
Compared to sell-thru and rental, subscription is a relatively new business model within the home entertainment sector of Western Europe. But this is not keeping it from dominating consumer home entertainment spending. By 2018, consumer spending will account for 54% of OTT video revenue, of which SVOD will comprise of 74% of the consumer spending category.
Over -the-top (OTT) video services — such as Netflix and Amazon Prime — are keeping their customers much happier than pay-TV subscribers. And, it’s not just the factor of 10 price difference. The study found that 54% of users were very likely to recommend their OTT service to a friend or colleague.
Leading pay-television services added over 20 million subscribers worldwide in a year, which is around the same number as DIRECTV has in the United States. The number of digital video subscribers to the 100 leading pay-TV services in the Multiscreen Index rose by 5.24 million in the second quarter of 2014, that’s an increase of just 1.6 percent.
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.