OTT Services With Linear TV on Track to Reach $7 Billion Revenue by 2021, Says Report

Over-the-top services such as DirecTV Now that offer live linear TV are projected to grow to $7 billion worldwide revenue by 2021, up from $1 billion last year, ABI Research reported. Such services meet consumer demand for anytime, anywhere programming and mobile-centric viewing and target a larger national audience, said analyst Sam Rosen. The services align with carriers’ efforts to adopt “mobile-first mindsets” as mobile subscriber bases and revenue advance beyond fixed line revenue with per-consumer, vs. per-household, connections, said ABI. The new model “helps win the battle for exclusive content rights but poses strong technical challenges,” said Rosen, citing the need to develop robust content management systems, video transcoding and storage pipelines and application ecosystems. Cobbling together video distribution networks is “just the beginning,” said Rosen. Offering mobile OTT services requires quality of service assurance, network congestion management, business analytics and content protection including analytics-based protection, such as provisions to limit password sharing. As mobile video consumption increases, mobile operators are exploring policy-based approaches to meet customer expectations and manage the effects of video services on mobile data caps, said the firm. The formidable technical challenges have led operators to make investments in technology platforms, ABI noted, citing the AT&T's purchase of Quickplay Technologies (see 1605160025) and Disney’s stake in BAMTech (see 1609220053). "Despite the technical challenges, OTT services help pay-TV operators attract cord-cutters with a cheaper pay-TV alternative, as well as next-generation customers who never planned to subscribe to a traditional pay-TV service," said analyst Khin Sandi Lynn. Live OTT services, especially those with sports packages, are gaining the most traction, as they allow customers to watch the same live programs offered through pay-TV services “at a fraction of the cost," said Lynn.