TV, movie OTT revenue to $167B by 2025 as COVID-19 drives viewer surge

OTT revenue

Booming growth of subscription video on-demand (SVOD) services during the COVID-19 pandemic will help double online TV and movie OTT revenue to more than $167 billion in 2025, according to new research. That’s up from $83 billion in 2019.

OTT Revenues in the US are forecast to surge to $68 billion by 2025, from $35 billion in 2019, according to Digital TV Research (DTVR), which adjusted its earlier forecast to account for COVID-19’s impact on the market. China, meanwhile, is also expected to see significant growth in OTT revenues, adding $6 billion by 2025 to reach $19 billion.

Two-thirds of global OTT revenue is forecast to come from five countries, with US and China in the lead in 2025, followed by the United Kingdom, Japan and Germany. That’s down from 72% in 2019. DTVR forecasts 19 countries will have OT revenues exceeding $1 billion by 2025, an increase of 6 countries from 2019.

SVOD to hold largest share of OTT revenue

SVOD revenues are forecast to grow nearly 27% this year, DTVR said, with revenues increasing 59% between 2020 and 2025.

SVOD is expected to gain share of revenue slightly in 2025 to more than 58% from 2019’s 57% share of all OTT revenue. That will be a decline from 61% forecast for 2020, a banner year as subscribers flock to services like Netflix – which added 15.77 million subs worldwide in Q1 2020 – Disney+ and the soon-to-launch HBO Max, among others.

In 2019, SVOD accounted for about $48.2 billion of OTT revenue. That’s expected to reach $97.5 billion in five years after growing to $61.1 million this year.

Between 2019 and 2025, SVOD services are expected to see an increase of revenue exceeding 102%.

AVOD takes a hit during pandemic

Ad-supported video also is expected to see big growth by 2025, although it will slow in 2020 due to COVID-19. Regardless, Y/Y growth for this year is forecast at a still solid 9.9%. Between 2020 and 2025, AVOD revenue is expected to more than double to $53.5 billion from $26.7 billion in 2020.

Between 2019 and 2025, OTT revenue from AVOD services is expected to expand 120%, the most of any category.

In 2019, AVOD’s share of revenue was 29%. By 2025, share is forecast to reach nearly 32%. This year, AVOD is expected to make up just less than 27% of OTT revenue globally.

AVOD revenue in China is expected to be hit especially hard this year, but should start to recover in 2021.

Rentals, transactional video see slower growth

Revenues from rentals are expected to increase $1.6 billion (77%) between 2019 and 2025 to $6.3 billion, according to DTVR.

Transactional video is forecast to grow by $3.8 billion (62%) to $10 billion over the same period. They’ll make up 3.8% and 6% of revenues respectively.

Rental and transactional video also are benefiting from increased viewership from consumers under lockdown orders, but to a lesser extent than SVOD and AVOD verticals.

The bottom line

From an economic perspective, the COVID-19 pandemic has been brutal for most of the world’s businesses. But the over-the-top video industry – even firms based on advertising support – are seeing tremendous gains as they continue to gain more traction with consumers, adding customers and seeing time watched spike.

The coronavirus pandemic is the evolution event that elevates streaming to the top of the food chain. As viewers increasingly abandon appointment TV for all but the most premium of events – think major sports – and bridle at increasingly bloated pay-TV (and virtual pay-TV) services, OTT will benefit.

Stay tuned and stay well.

Jim O’Neill is Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn