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OTT Services Nearing Saturation

Netflix will increase its share of OTT video service users to 71.7% in 2019

December 17, 2015 | Advertising & Marketing | Video

By 2019, 72.1% of US internet users will use over-the-top (OTT) video services. Such high penetration suggests saturation, but for many players in the market there is still significant room for growth.

US Over-the-Top (OTT) Video Service Users, 2014-2019 (millions and % of internet users)

eMarketer’s first forecast of US OTT video service users shows that the vast majority of digital video viewers use these services. The category is near saturation, in large part because of YouTube’s commanding presence in this area, as explored in a new eMarketer report, “Q4 2015 State of Video: Monetization, Audience, Platforms and Content,” which is the fourth in an ongoing series of quarterly “State of Video” reports.

By 2019, 89.3% of US digital video viewers will watch via OTT services, up from 88.6% in 2015. The small percentage of viewers who do not use OTT services watch via broadcast or cable networks’ authenticated apps or sites, which do not fall under eMarketer’s definition of OTT.

eMarketer’s breakout of US OTT users by service shows that YouTube is prevalent, with a more than 94% penetration rate throughout the forecast period. There is little if any room for YouTube to grow beyond this near saturation, but other leading services will undergo significant growth over the next several years. Netflix will increase its share of OTT video service users to 71.7% in 2019, up from 63.2% in 2015. During that same timeframe, Amazon will grow to 44.4% from 36.0%, and Hulu will climb to 41.2% from 33.1%. These rates indicate that US OTT usage is on a sharp growth trajectory, even factoring out YouTube.

US Over-the-Top (OTT) Video Service Users, by Service Provider, 2014-2019

The projected penetration rates of viewing devices among US connected TV users will gradually shift away from legacy technologies such as disc players and game consoles toward newer, more-portable set-top boxes and streaming sticks.

In 2015, eMarketer projects game consoles will lead the connected TV category by a substantial margin over the next two devices: smart TVs and Blu-ray players. By 2019, consoles will continue to lead but their share will erode, and streaming sticks—specifically Google’s Chromecast—will become the second-most pervasive connected TV device. Amazon’s Fire TV Stick was too new to be included in eMarketer’s October 2015 forecast, but it is expected to make a significant impact in this category in future forecasts.

eMarketer corporate subscription clients can view the full report here.

Get more on this topic with the full eMarketer report, “Q4 2015 State of Video: Monetization, Audience, Platforms and Content.”

eMarketer releases over 200 analyst reports per year, which are only available to eMarketer corporate subscribers.

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