TV Advertising Swings Towards OTT

Advertising on OTT video services is growing explosively, accounting for 30% of all video ad spend by the end of 2017 compared with 8% 14 months earlier, according to data from video ad marketplace SpotX owned by German broadcaster RTL.

If correct, this represents a sudden jump to life for OTT video advertising after being initially slow to follow the rapid growth of ad-free subscription VoD (sVoD) services such as Netflix, Amazon and Hulu provide. It also defies earlier predictions, although one or two analyst groups were right on the money with their forecasts early in 2017. Forrester for example identified 2017 as the year when ad-supported OTT would finally take off after being slow initially to gain traction simply because the associated services lacked compelling content at all comparable with sVoD. While such services provided little more than lower tier user generated or web-only content they failed to attract the concentration of eyeballs that would interest advertisers.

But that all changed with the advent of serious linear OTT services such as AT&T’s DirecTV Now and DISH Network’s Sling TV service in the US or Sky’s Now TV in several European countries including the UK and Germany. Meanwhile Google’s YouTube and Hulu have also entered the fray with live streaming OTT services that are attracting ad money. This has put major commercial weight behind wholly or partially ad-supported linear OTT offerings, explaining the rapid OTT ad revenue growth charted by SpotX.

The site did not disclose the absolute numbers but in any case they do not correlate that closely with other sources. For example, the portal estimates global TV advertising revenues at around $180 billion for the year 2017 compared with about $26 billion for online video advertising, which is under 15% rather than the 30% cited by SpotX. But comparisons between such surveys are notoriously tricky because they count the market in different ways, some including revenues associated with ads in the web sites of print publications not normally rated as dedicated OTT video.

Nevertheless, while sVoD will remain the primary engine of OTT revenue growth for the foreseeable future, the rapid rise of linear OTT will make a fast-growing impact through direct subscriptions as well as pay per view to some extent and also advertising. Indeed, according to research firm Ovum, subscription OTT services that are driven by linear streaming rather than on demand catalogues are now the fastest growing segment of OTT video. They currently account for about 20% of the global OTT market but this will rise to about 35% by 2022, according to the firm.

What is undeniable is that global OTT revenues as a whole are climbing steeply and are set to continue doing so. A report just out from Digital TV Research covering 138 countries forecasts that worldwide annual revenue from OTT services will grow from about $36 billion in 2016 to $82 billion by 2022 even though pay TV revenues as a whole will decline gently over that period. This highlights how OTT is taking an ever-greater slice of the total pay TV revenue pie, set to rise from 15% in 2016 to 28% in 2022. 

Let us know what you think…

Log-in or Register for free to post comments…

You might also like...

Essential Guide: Live IP Delivery

Broadcasting used to be simple. It required one TV station sending one signal to multiple viewers. Everyone received the same imagery at the same time. That was easy.

Essential Guide: Reality of IP

As broadcasters migrate to IP, the spotlight is focusing more and more on IT infrastructure. Quietly in the background, IT has been making unprecedented progress in infrastructure design to deliver low latency high-speed networks, and new highly adaptable business models,…

The Proven Essentials to Ensure an Effective UI

Innovation in the media and entertainment industry is at an all-time high with devices, backend technologies, operating systems and consumer behaviors constantly evolving. A key element of this evolution is how viewers see, experience, navigate and consume the content they…

Edgeware Reports Peak CDN Traffic Doubling During FIFA World Cup Matches

Most CDNs (Content Delivery Networks) and the video streaming services they support have coped well with the peak time loads of the current FIFA World Cup, beyond a few well publicized glitches.

Articles You May Have Missed – June 20, 2018

Until now, 4K/UHD and high dynamic range (HDR), in many ways, has been little more than a science project, as manufacturers have struggled to convince production entities of the long-term practicality and viability. Fears of overly complex pipelines and…