MTM survey predicts global boom for premium OTT

    Share on

    How MTM white paper respondents expect global OTT market to develoip

    By Barry Flynn, Contributing Editor

    Industry investment in premium OTT video services is expected to grow at an average rate of 70% over the next three years, according to a global industry survey by research and strategy consultancy MTM released at the Connected TV Summit in London, and commissioned by security and multiscreen solutions provider NAGRA*.

    Related to this finding is an expectation that there will be between 3 and 5 new premium OTT launches in the territories surveyed over the same period (see Figure 1 below).

    Figure 1: Expectations for development of the premium OTT video market over the next three years


    Nascent OTT markets1

    Accelerating OTT markets2

    Advanced OTT markets3

    Average no. of premium OTT launches per territory







    Growth in industry investment expected on average







    Source: MTM

    1 Brazil, Indonesia, Malaysia, Nigeria, South Africa, Turkey
    2 Australia, Argentina, Germany, New Zealand, Russia, UAE
    France, Norway, Sweden, Singapore, UK, USA
    NB territories above are illustrative of those covered

    Meanwhile, two-thirds of pay-TV service providers believe that bringing third-party OTT services onto their platform represents an important opportunity. The range of potential third-party partners mentioned by respondents is eclectic, taking in relationships with major international services such as Netflix and Amazon, the direct-to-consumer offers of pay-TV broadcasters (e.g. HBO Go), local content (e.g. Malaysian video portal TonTon), and in some cases niche content providers such as Hopster – which specialises in kid’s content.

    Motives for such partnerships fall into three broad categories, MTM found. Some operators believe that consumers are going to subscribe to third-party premium OTT services whatever they do, and that it is therefore better to keep that audience ‘on-platform’ by integrating services that appeal to them.

    Others are primarily interested in adding value to their range of content, helping both to satisfy customer demand and to differentiate their offer.

    Finally, there are those who believe that for smaller operators, including many telcos and cable operators, creating their own premium OTT services is simply not possible for reasons of limited engineering and software development resource, or lack of content assets and/or content expertise. Building relationships with companies that are strong in these areas therefore makes sense.

    There are principally two business models being pursued by those interested in partnering with a third-party OTT provider, MTM found. Currently, the most common is an ad-hoc arrangement restricted in many cases to simply integrating a third-party service onto a set-top box with some additional marketing support. 

    However, many respondents see operators increasingly providing distribution, billing and first-level customer support in the future. In some cases this extends to providing a ‘market-place’ and/or selling entire packages of third-party OTT content and apps, which MTM likens in some ways to “replicating the linear channel aggregation model.”

    Simon Trudelle, Senior Product Marketing Director for NAGRA, said the survey results showed that “premium OTT is a reality, and it’s at the top of mind of service providers.” But it also implied that “operators will need to improve their integration capability to ensure a strong user experience and probably offer supporting tools and services for these third parties,” he said.

    It is worth underlining the fact that a third of respondents did not perceive OTT partnerships to represent an important opportunity. While MTM notes the comment by one respondent that “operators are at different levels of acceptance of the partnership model – some are still in a state of denial,” it goes on to point out that “major pay-TV operators with access to strong content rights are well-positioned to sustain a go-it-alone strategy, investing in their own on- and off-net premium OTT services.”

    For Trudelle, “In the end, the OTT playing field will be highly competitive – no doubt about it – there will be consolidation – no doubt about it – but at the same time it will be potentially a more open marketplace for providers to then interact with pay-TV service providers and in some cases also compete directly.”

    This was why some operators preferred a ‘go-it-alone’ strategy, he suggested. “[They] believe that they will just build their OTT offering on their own, and they don’t need to partner.” As MTM suggests in its report, Trudelle thinks these will be found amongst the ranks of the world’s leading pay-TV companies, “especially the ones that have strong control over content rights, which is the case with BSkyB and Canal+: I think these guys will play it alone and will actually see these other potential partners as competitors. While the ones that don’t have strong content rights and are more distribution platforms will rather welcome Netflix and others as actually catalysts for growing their platforms […] and getting more value to their consumers.”

    Trudelle said he was encouraged by the survey’s findings about those platform and technology factors which respondents perceived to be most important in determining the success of future OTT video services. MTM found that the most highly-rated were an integrated user experience, multi-platform distribution and strong content protection (see Figure 2).

    Figure 2: Success factors for platform and technology-related OTT video services, ranked by level of importance


    Platform and technology


    Offer service through a mobile/tablet app


    Provide an integrated user experience across devices


    Possess a best-in-class content protection system


    Possess a fully ‘cloudified’ back-end technology


    Offer service through a STB


    Offer customers the ability to cast programmes


    Offer service through a smart TV app

    Source: MTM

    Trudelle said these conclusions were “very much in line with our product vision and the investments we have made over the years to build a very scalable and user-centric multiscreen experience. That is really what operators have to consider in terms of technology investments for the future – and we have that. […] It corresponds to what we sell and what we can bring to our customers and new prospects.”

    * The MTM research involved an online survey of 90 senior industry participants across 31 different countries, supplemented by in-depth interviews with a cross-section of industry players

    Share on