OTT video picks up in emerging markets

OTT revenue in emerging markets to expand to $6.0 billion in 2019
OTT video has grown not only in developed regions but also in emerging markets.
OTT video has grown not only in developed regions but also in emerging markets.


Subscription video on demand (SVoD) services such as Netflix were available to 1.3% of emerging market households in 2014, with a user base of 19.4 million, according to the report by Pyramid Research. This number is expected to grow to 6.4% by the end of 2019, increasing the user base to 102.7 million.

This shows the extent to which OTT video has grown not only in developed regions but also in emerging markets, both as an alternative and as a complement to established free-to-air (FTA) and pay-TV platforms.

Daniele Tricarico, senior analyst at Pyramid Research, said: “In recent years, OTT business models entirely relying on advertising revenue streams have become difficult to sustain, given the high cost of content. In many emerging markets, we are witnessing the emergence of hybrid models, whereby services offer free content to expand the user base, but at the same time position premium SVoD and transactional video on demand (TVoD) services to generate additional revenue.”

According to the findings, there is a slow but steady growth in the Middle East and Africa region. As more paid services emerge and AVoD services increasingly position SVoD for premium content, Pyramid Research expects the total paid OTT revenue (SVoD and TVoD) to expand in the next five years to represent 7% of the regional pay-TV revenue.

Neda Dharia, analysts at Ovum, said to CommsMEA that OTT players in the MEA markets have had a significant adverse impact on traditional revenue sources such as SMS and voice. “In fact Ovum estimates that in 2013, the MEA region lost over $1 billion from SMS revenues alone due to the popularity of OTT players,” she said.

“Operators should be careful when establishing partnerships and they must clearly identify their intended goal from the partnership from the offset. For instance, if operators wish to grow their mobile broadband revenue, grow subscriber base or reduce churn then partnering with large established players would be beneficial,” said Dharia, when asked about the type of partnerships that operators should adopt with OTT players.

According to Paul Budde, analyst at BuddeComm, service providers can offer OTT players value added infrastructure services and managed services.

“Where the regulators are more lenient special content deals with OTT players can also be offered. Some of the operators however will try and use their monopoly or dominance to force partnerships where these OTT will have to pay them money in order to be able to operate efficiently,” he said.

Budde also highlighted that OTTs bring innovation to the telecommunications market. “Without them it would be a totally different story. Look how little innovations the telcos have brought to the market, they are utility operators and have a poor record in delighting and exciting customers, they are not innovators of customer services, nor is it likely that they as engineering utilities will ever be able to do that,” he said.

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