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Report: Netflix still king of U.S. OTT market

Thu, 11/01/2012 - 2:13pm
Mike Robuck

Despite reeling around like a drunken sailor on shore leave when it split up its streaming and mail DVD order services, Netflix is still the reigning champion of the over-the-top (OTT) market in the United States.

According a recent report by ABI Research, Netflix accounted for just over 50 percent of the $3.2 billion market in North America. Amazon and Apple held the second and third spots, respectively, on ABI’s OTT vendor matrix.

ABI Research evaluated U.S OTT vendors on various factors, including market share, device reach and business model, which were divided between two main axes of “innovation” and “implementation.”

Netflix scored the highest on both implementation and innovation, while Amazon and iTunes occupied the second and third positions, with Apple edging Amazon for implementation and Amazon ahead for innovation.

“In addition to market share, device reach to mobile devices weighed heavily in both the implementation and innovation scores,” according to senior analyst Michael Inouye. “Apple’s iTunes scored well for its ability to leverage the cohesive Apple ecosystem. While Microsoft’s Xbox Zune video service did not place well in this analysis, the platform overall best depicts the growing importance of the hybridization between OTT and pay-TV services, making Xbox Live a platform to keep an eye on.

“Many of these elements were also true for the multi-screen analysis, where operators like Cablevision scored lower in part due to device support and lack of differentiators.”

The report also took note of cable operators’ efforts to offer their own streaming services to their subscribers.

“Once viewed as a key element to cutting the cord, pay-TV operators are expected to launch new OTT services to target lower price points, as well as customers beyond their geographical footprint,” said practice director Sam Rosen. “Early hybrid offerings include early work from Synacor and Charter Communications that allows consumers to search for content from the pay-TV operator and key OTT providers from the same portal.

“Consumers simply want access to content, regardless of who is providing it, so innovative solutions like this will help the OTT market and bring additional exposure to the multi-screen market, which is still in its early stages.”

Last year, Netflix raised the price on its video-streaming service and tried to split off the mail-order DVD business under the new name of “Qwikster” before scrapping the latter following an uproar by consumers. Netflix subsequently lost customers and saw its stock price plummet, but has since regained some of its momentum.

Earlier this year, Consumer Reports did a study that found Vudu, Apple and Amazon’s streaming services scored higher than Netflix when it came to customer satisfaction.

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