Over the Top (OTT) Services Market - Premium and Subscription Emerge as Leading Segment based on Business Model

OTT services are delivered over internet service provider’s channel, however, they don’t have any involvement in the planning or provisioning of service. As these services are directly offered to consumers ‘over the top’ of internet service provider’s network, they have derived the name - over the top services. In response to the proliferation of smartphones and their compatibility with OTT applications, the demand for OTT services is poised to rise exponentially in the coming years. Likewise, affordable rates of high speed mobile internet has bolstered the adoption of OTT market at large.

The OTT service providers have emerged as tough competitors for telecom service providers and cable operators. The mobile network operator messaging revenue has already declined to a great extent in the last five years and the impact has started to show up in their voice revenues as well. Also, the number of cord-cutters and cord trimmers has gone up due to on-demand media content available and reasonable rates as compared to traditional cable operators.

The global OTT services market was valued at US$ 925.87 Bn in 2016 and is forecasted to expand at a CAGR of 16.4% from 2017 to 2025, reaching a value of US$ 3,538.04 Bn in 2025.

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Premium and Subscription Emerge as Leading Segment based on Business Model

On the basis of business model, the market is segmented into premium and subscriptions, adware, and ecommerce. The premium and subscription business model segment emerged dominant with a share of nearly 48% in the overall market in 2016. The segment earns revenue from fixed fee that the customer pays to download and access their application. The memberships or freemium turned premium service applications are also part of premium and subscriptions’ business model. Revenue generated by the premium and subscription segment is expected to increase owing to the increase in revenue of OTT media content and cloud service applications. The adware business model that earns revenue from advertisements on OTT applications is also expected to contribute for the OTT market. The ecommerce business model earns revenue from sales of its own products and services.

E-services that comprise of e-learning, e-health, e-business and e-commerce was the largest application segment in terms of revenue in the OTT services market in 2016. The e-services segment is also anticipated to hold its foremost place throughout the forecast period. Media content and cloud services are also expected to produce higher revenues in the forthcoming period owing to quick content and service on demand made available through high speed internet at a reasonable price.

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Asia Pacific to Showcase Higher CAGR than Other Regional Segments

North America led the OTT services market in 2016 and is expected to remain dominant throughout the forecast period 2017 to 2025. The primary drivers for the growth of OTT services market in North America region are the highest mobile internet penetration levels as compared to other regions with internet speed from 13.1 Mbps to 14 Mbps in the U.S.A and Canada. Apart from North America, Europe and Asia Pacific are expected to experience significant growth in the OTT services market during the forecast period. TMR forecasts the OTT services market in Asia Pacific to exhibit the highest CAGR of 16.1% between 2016 and 2023.

Based on end use, the global OTT services market can be bifurcated into personal and commercial segments. Among end-use verticals, the commercial segment emerged dominant in the OTT services market. Within the commercial segment, the ecommerce sector held the largest share of 32.6% in 2016. Apart from ecommerce, the media and entertainment, IT, education, and healthcare held considerable share within the commercial segment. This trend is expected to continue prevailing in the coming years owing to the increasing application of OTT in media and entertainment, and ecommerce.

Major OTT services market players profiled in the report areAmazon Inc., Twitter Inc., Netflix, Inc., Facebook, Inc., Dropbox, Inc., Google, Inc., LinkedIn Corporation, Skype (Microsoft Corporation), Apple, Inc., Evernote Corporation, Hulu, LLC., and Rakuten, Inc.

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