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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