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Cable Technology Feature Article

September 30, 2009

Report: Over-the-Top Video Will Capture Significant Share of Video Rental Market by 2014

By Rajani Baburajan, TMCnet Contributor

A recent analysis conducted by The Diffusion Group (TDG), which provides market planning and research services for the digital video industry, shows that on-demand delivery of Internet video to the TV will grow from $621 million in 2009 to $2.1 billion by 2014.

In its latest digital media analysis, "Broadband-Enabled TV - Rise of the OTT Provider," TDG says that Internet-to-TV video will account for more than 25 percent of total annual video-on-demand revenue by 2014.

This trend will be further fueled by the rapid distribution of ancillary Web-enabled platforms such as game consoles, Blu-ray players, and hybrid set-top boxes.

While TVs with embedded broadband support are only now arriving in retail channels, these secondary platforms set the stage for a rapid uptake of Internet-to-TV video services, both pay-per-view and subscription-based.

According to TDG analysis, the industry estimates that U.S. DVD rental revenue will exceed more than $8 billion by 2014. By that time Over-the-Top (OTT) video rentals will top $2 billion, accounting for 25 percent of home video rentals.

“If that fails to warn companies like Blockbuster and Time Warner (News - Alert) Cable as to the magnitude of this threat, they are asleep at the wheel,” says Colin Dixon who authored the report.

This digital media analysis is the first of a two-part report series by Dixon on the emerging opportunities associated with OTT video services. The initial report analyzes and forecasts global demand for OTT services, and revenue associated with both pay-per-view and subscription video services, as well as the diffusion of broadband-enabled TVs.

In the second report, TDG will provide forecasts for a variety of Web-enabled video platforms including game consoles, Blu-ray players, hybrid set-top boxes, Internet extenders, and others.

Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

Edited by Stefania Viscusi