The United States OTT Market is expected to register a CAGR of approximately 11.22% in terms of revenue and approximately 2.25% in terms of subscribers over the forecast period. The United States is one of the largest OTT markets in the world.
- The high penetration of smart devices, like smart TV and smartphone, growing demand for VOD content, and a high rate of per-user payment are some of the major factors driving the country’s OTT market. Also, most of the top global OTT vendors, like Netflix and Amazon, are US-based, which further provides an advantage to the regional market.
- The increasing gravitation toward OTT content simultaneously frees US citizens from cables, geographic restrictions, and broadcast schedules and fundamentally changes the way video is sold, produced, and consumed.
- Increasing adoption, thus, has been attributable to the narrow genre choices, packages flexibility, wider device availability, internet penetration, and overall lower costs. Netflix and Amazon are the most commonly subscribed OTT platforms in the country.
- The surging percentage of viewing time going to OTT video content, with increasing revenue numbers, reflects the streaming growth, is changing the country’s entertainment landscape. According to the Arizona-based Limelight Networks, globally, viewers spend an average of 6.8 hours per week consuming OTT video, with the United States topping the national averages at 8.55 hours.
- The COVID-19 has increased in viewership numbers and streaming hours, and the lack of new movies in theatres also boosts OTT platforms. SVOD has boomed during the lockdown. Hybrid services such as CBS All Access and Hulu that offer an ad-supported business model witnessed a bump in advertising revenues in the initial phase.
- However, some costs for OTT providers also rise along with increased consumption, with services impacted to varying degrees depending on the content delivery network model employed. As the OTT viewing amount goes up, so does the OTT provider’s delivery cost since CDN services are usually charged for the amount of content delivered.
Key Market Trends High Penetration Of Smart TV And The Presence Of Major OTT Providers Has Contributed To The Growth
- Streaming content in the region has been intensifying as content owners like Disney go direct to consumer and Telcos (AT&T) and OTT-only operators like Amazon, to name a few. Simultaneously, the emergence of 4K for streaming has been propelling the growth of OTT content to be made available across smart TV formats.
- OTT players such as Netflix, Disney, NFL, and NBC have been investing in creating OTT TV apps to bring their videos directly to consumers. With 40% of US homes already using a smart device to stream content, the percentage of smart TV penetration has significantly gone up.
- Current market success has been dependent upon partnerships, further exemplified by the numerous broadcaster joint ventures launched in 2019. Also, developments in traditional pay-TV services and virtual pay-TV services inclusive as a mix of broadcast and cable TV networks have been influencing the growth of OTT in the region.
- More recently, with the COVID-19 outbreak and nation-wide lockdowns, the hours spent on TV have been rising. This entails a positive growth outlook on a near-term basis. Whereas on the vendor front, Viacom is a significant vendor to be offering a direct-to-consumer (D2C) service on the back of Pluto TV, the USUS free streaming service which the company bought recently.
- In 2020, more than 65-70% of US broadband households own at least one streaming entertainment product, and 50% own a smart TV.
SVOD Segment to Hold a Significant Market Share
- Subscription Video on Demand (SVOD) is similar to traditional TV packages, allowing users to consume as much content as they desire at a flat rate per month. Major services include Sky (plus its subsidiary Now TV), Amazon Prime Video, Netflix, and Hulu.
- More than 90% of the SVOD subscribers come from the US market alone in the North America region. The emergence of SVoD platforms is also helping to drive consumers’ cord-cutting trends. The number of SVOD subscriptions in the United States is on pace to grow more than 50% in the next five years. But when that aggregate number is broken down by household, it might not seem quite so significant.
- The US SVOD market is one of the significant markets globally; by 2025, the country is expected to witness a dozen platforms with more than 5 million paying subscribers,—revealing just how ahead the US market is compared with the rest of the world. Growth for established players such as Amazon, Netflix, and Hulu will be affected due to intense competition from younger rivals such as Disney+, Peacock, and the augmented CBS All Access.
- The recent launch of new SVoD Platforms Disney+ and Apple TV+ will heat competition in the US market, increasing pressure not only on traditional pay-TV operators but also on incumbent SVoD platforms such as Netflix.
Competitive Landscape The US OTT market is witnessing increasing competitive rivalry as more companies are entering the market, leading to the gradual consolidation of the market. Also, TV broadcasters are entering the market either by launching their own app or platform of investing in some other OTT platform. Eventually, in the coming years, most of the TV cable operators are expected to invest in these business models to establish their presence in the industry.
Further, OTT services and platform providers have been engaging actively via new launches, collaborations, multiple device integrations, etc. Given the recent sweep of media mergers and acquisitions, the US market vendors are competing with fellow streaming services by joining forces.
- August 2019 - Wattpad collaborated with Viu, a pan-regional OTT video, to develop Viu Original series, and film projects are based on Wattpad stories. This collaboration has hinted at the creation of original content in order to attract the youth-oriented customer base.
- March 2019 - Disney acquired 21st Century Fox to position itself for a streaming-centric future and launched ESPN+ streaming service. Later on, the company also launched another service called Disney+ (that was also acquired by Hotstar in India), which includes new shows based on the Star Wars and Marvel universes and Disney’s entire movie library.
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