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OTT, on-demand to generate combined revenue of $31 billion in 2016, says IMS Research

Over-the-top (OTT) video services will generate $16.4 billion in 2016, and video-on-demand (VOD) services from pay-TV operators will generate another $14.7 billion, for a combined $31.1 billion in on-demand revenues, according to new research from IMS Research.

According to the research group, the growing number of fixed connected devices in and increasingly acceptable bandwidth speeds are two important factors enabling the delivery of on-demand services.

The pay-TV set-top box will continue to deliver the majority of on-demand entertainment into homes, although fixed in-home devices, such as connected TV sets and game consoles, will increase their impact on on-demand viewing.

IMS Research’s newly published “Over-the-Top Video – Service Delivery & Business Models – 2011 edition” forecasts that 5.9 billion pay-OTT transactions (pay-per-view and subscription) will be initiated via fixed in-home devices in 2016, up from an estimated 563 million pay-OTT transactions in 2011. This compares to a forecast of 12.9 billion pay-VOD and OTT transactions initiated via the pay-TV set-top box in 2016, up from an estimated 5.2 billion in 2011, as forecasted in another IMS Research study, “On-demand Services Business Models: Video, Games & Over-the-Top – 2011 edition.”

Although OTT is viewed as a significant threat to linear pay-TV operators, traditional pay-TV subscription revenues, estimated at over $244 billion worldwide in 2010, will continue to dwarf service revenues generated from OTT and VOD for quite some time, according to IMS Research.