Asia-Pacific to take OTT lead
- 25 May 2017
- 777 Read
The global OTT services market, encompassing all the free and paid for services available on the open internet market, amounted to €390 billion in 2020.According to data produced by Idate and published in its Digiworld Yearbook 2017, it is forecast to reach close to €625 billion in 2020, growing by an annual rate of 12.5%. It notes that with its very broad array of services, the internet sector is nevertheless steadily nearing maturity. Which is why certain sub-segments are now progressing at a more moderate pace, notably gaming, search engines and social media.
North America is still the world’s biggest OTT market, claiming €119 billion in revenues in 2016. However, between now and 2020 Asia-Pacific will emerge as the number one internet services market, not least thanks to its demographic advantage.But it is above all its capacity to create industrial giants that dominate markets, notably in Europe (excluding Russia) where the few rare major internet companies often end up being taken over by a non-European counterpart such as Skype, PriceMinister, Meetic or LoveFilm. The internet ecosystems in China and South Korea both have very strong local roots.
Asian players too are now working on building a global footprint, even in advanced countries. Japan’s Rakuten and especially China’s Tencent and Alibaba have made inroads internationally with their communication and e-commerce services, and more recently in gaming. So they could prove serious challengers worldwide. They are also the only players that can rival American companies in terms of revenue.
Idate also notes that the internet is not dominated by free services when it comes to value creation. Companies that have been successful in selling online advertising are few in number, especially on mobile where Google and Facebook together earn 88% of all ad revenue. For most other players, their salvation lies in for-pay services using a variety of formulas, ranging from subscriptions to freemium models, micropayments for in-app purchases and more classic e-commerce sales.
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