Market Dynamics
Global OTT Market Drivers
Growing Demand in Emerging Economies to Boost Market Progress
In developing regions, demand for over-the-top (OTT) services is sluggish due to low broadband penetration caused by insufficient coverage and investment, as well as the presence of a large population with low incomes, which has a negative influence on subscription-based OTT services. However, the industry's growth is driven by the continued expansion of broadband access and the rise in per capita income among the people. The performance and speed of broadband networks have undergone a discernible increase.
For instance, a fraction of Brazilian households achieved a greater than 4Mbps speed. There have been significant advancements in the 4Mbps range. Even though more homes are now achieving speeds of at least 10 Mbps and 15 Mbps, adoption and coverage of these speeds are still limited. The average speed has, however, been on the rise in LAMEA and Asia-Pacific developing nations. Additionally, video over IP might open the door for pay-TV providers to consider combining standalone OTT services with third-party OTT services as part of the leading service package.
Additionally, the number of smartphones and better broadband connections have significantly expanded in emerging nations. As a result, more people are using video streaming apps. From 2014 to 2019, mobile data traffic increased across Latin America, the Middle East, Africa, and Asia-Pacific, with respective CAGRs of 59%, 72%, and 58%. This shows how users of OTT services are increasingly adopting smartphones, which significantly impacts the expansion of the global OTT market share.
Global OTT Market Restraints
Inadequate Data Network Infrastructure to Restrict Market Growth
Unlike developed markets, emerging markets have less stable and resilient data network infrastructure. Online content consumption is constrained in rural locations due to a lack of wireline infrastructure. The delivery of high-quality video content necessitates high bandwidth and throughput, which is out of reach in some areas and severely limits market expansion. According to Netflix, the recommended bandwidth needed to stream standard definition (SD) video is 3Mbps. The bandwidth requirements for HD and UHD are 5Mbps and 25Mbps, respectively. If delivery speeds required by infrastructure are not met, it will have a detrimental influence on customer experience, which is what is limiting the market's expansion.
Global OTT Market Opportunities
New Markets to Boost Market Opportunities
More than a billion middle-class customers will enter the telecom markets by 2025 due to digital expansion. This will provide several OTT players access to new markets. Messaging, audio, content browsing, and video calls are included in OTT services. The "voice" services offered by traditional telco operators once dominated several sectors. Voice and video chat services are currently available on apps like Google Hangouts, Facetime by Apple, and WhatsApp that are user-friendly, inventive, and more appealing.
Due to their high-quality offers and widespread consumer acceptance, these products have made a name for themselves. The traditional telecom markets could be in danger if they don't discover innovative methods to capitalize on the OTT potential. As a result, many new telecom providers are on the market, which is anticipated to generate profitable prospects for market expansion over the forecast period.
Regional Analysis
The global over-the-top market segment includes North America, Europe, Asia-Pacific, and LAMEA.
North America and the Asia Pacific will Dominate the Regional Market
North America commands the regional market while growing at a CAGR of 26.4%. The availability of high-speed internet and the expansion of services offering a variety of HD and 4K videos in North America are the main factors propelling the over-the-top market growth. New services like AT&T, ESPN, Turner Sports, and Crown Family Media Networks are also gaining significant popularity in the United States, which is expected to boost the market's expansion.
In addition, OTT mobile apps are gradually dominating the OTT market and video services, which is most certainly generating profitable opportunities for the market. For instance, three out of every five Canadians who use a mobile phone for the internet use OTT mobile apps for messaging. Additionally, in 2019 there were more than 20 million OTT chat app users in Canada. Depending on the present viewing habits of consumers, North America is also anticipated to have lucrative growth opportunities in live as well as linear OTT services.
The Asia Pacific is predicted to hold USD 839 billion, growing at a CAGR of 38.1%. Due to better payment alternatives, quicker bandwidth increased 4G coverage, rising smartphone & pay-TV adoption, declining data prices, and rising per capita income, the Asia Pacific is expected to grow significantly throughout the forecast period. It is predicted that the unfurl of 5G and the expansion of LTE will further accelerate market growth in this area. Several telecommunications companies in the area have begun to bundle OTT services with their data plans to improve their value offer. This is helping to fuel the market's expansion. Furthermore, it is anticipated that the increasing consumption of online video content in this region will accelerate the use of OTT services.
Segmental Analysis
The global over-the-top market is segregated based on the component, device type, content type, revenue model, user type, end-user, and region.
By Component Analysis
Based on the component, the categories include solutions and services.
The section of solutions is projected to expand at a CAGR of 29.17% and hold the largest share. The over-the-top system includes a video on demand, live streaming, audio streaming, and additional options. The market is expanding due to consumers' increasing demand for cutting-edge over-the-top media sharing solutions. Thanks to OTT streaming service providers, users can send material directly to anybody, anywhere, at any time.
The section of services holds the second-largest share. The deployment of services guarantees that solutions will operate efficiently, transparently, and under control throughout the entire process, from solution adoption to upgrade. Professional and managed services are among the OTT services. The demand for these services is anticipated to expand as these technologies and platforms become more widely used.
By Device Type Analysis
Based on the device type, the categories include smartphones, smart TVs, laptops, desktops & tablets, gaming consoles, set-top boxes, and others.
The smartphone section is most likely to grow at a CAGR of 35.4% and hold the largest share. Customers who cannot afford to purchase smart, linked TVs frequently stream OTT content on cellphones. The sale of smartphones with larger screens in developing nations is anticipated to rise significantly over the following years, helping to expand the global market as more people use their smartphones to watch OTT services.
The smart TV section is to hold the second-largest share. Since many manufacturers now include internet functionality as a standard feature, the percentage of shipments for smart TVs has consistently increased over time. A further factor driving the use of smart TVs is the rising popularity of subscription video-on-demand (SVOD) services. Additionally, the availability of smart TVs at reduced costs from key players like Amazon and Roku is fueling the market's expansion.
By Content Type Analysis
Based on the content type, the categories include video, audio/VoIP, games, communication, and others.
The video section will likely hold the largest share, growing at a CAGR of 34.55%. With the rising commoditization of data and ongoing price wars, customers now have a practical choice in online video streaming. Because of this, more and more global, regional, and independent platforms focus on market capitalization. The market is expanding because of the shift in emphasis from urban youth to mainstream audiences with diverse linguistic backgrounds in developing economies.
The games section holds the second-largest share. E-sports, internet games, and video games are all included in the games category. The e-sports market is expanding due to the industry's consistent revenue development. Additionally, during the projection period, the OTT market share is anticipated to benefit significantly from the growth of the internet and video game markets in developing nations.
By Revenue Model Analysis
Based on the revenue model, the categories include subscription, advertisement, hybrid, and others.
The subscription section will most likely advance at a CAGR of 31.4% and hold the largest market share. Due to the 5G network services and high-speed internet available in many industrialized nations, the subscription video on demand (SVOD) market is predicted to increase quickly over the next five years. The primary reason fueling the market's expansion is the surge in mobile computing hardware and software usage.
The advertisement section will hold the second-largest share. Advertisers are paying more for their advertisements, whether they are targeted to a smart TV, a laptop, or a mobile phone, due to the introduction and popularity of smart TVs and the consumption of VOD material on them. Due to the success of VOD (video on demand) advertisements, the AVoD (ad-supported video on demand) market is anticipated to develop rapidly.
By User Type Analysis
Based on the user type, the categories include personal and commercial.
The commercial section is predicted to hold the largest share, growing at a CAGR of 29%. Businesses and corporations concentrate on developing their own OTT video platform to facilitate communication with both customers and staff. The OTT trend improves team communication productivity while saving money and enhancing user experience. Additionally, leading market participants are launching cutting-edge solutions, which are anticipated to benefit how widely businesses use OTT services.
The personal section holds the second-largest share. Over-the-top (OTT) services like Netflix, HBO Go, and Roku are becoming more and more popular among consumers than conventional cable and satellite TVs. Increased smartphone use, internet usage, and a significant shift toward digitization contribute to the increased adoption of OTT services within the respective user base.
By End-User Analysis
Based on the end-user, the categories include media & entertainment, education & training, health & fitness, IT & telecom, e-commerce, BFSI, government, and others.
The IT & telecom sector is anticipated to expand at a CAGR of 39.1% and hold the largest share. The popularity of OTT services like Skype, Google Duo, and other video calling applications has increased, which boosts the revenue of the IT and telecom sector. The main driver of the OTT market's expansion is the increase in OTT voice, text, and video call services in the IT and telecom industries.
The e-commerce section holds the second-largest share. Many applications, including web services, online shopping carts, and mobile devices, are included in OTT services for e-commerce. Additionally, advertisements that are shown on various OTT applications like Hulu, NBC Universal, and CBS are well-liked, catered to particular audiences, and can open up advertising options for e-commerce players.
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