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By many accounts, consumer internet video consumption is soaring, increasing the opportunity for online video platform, or OVP, vendors. OVP vendors' technology can be the base of a provider's internet video delivery system, and the segment's revenue is often based on the amount of video viewed. We forecast that OVP revenue from premium media services will grow from $713.4 million in 2015 to $1.23 billion in 2020.
The OVP is often the glue, integrator, and primary agent guaranteeing the video delivery. While we have created a broad category for OVPs, different vendors have different pieces they do themselves while outsourcing others. Complexity of digital delivery has become greater over time, with many more devices to reach and many more points where the delivery system can break down.
The OVP pulls together the disparate parts of the over-the-top delivery system, including whatever third-party solutions the customer requires. The OVP usually includes content management, reporting, analytics, a player, monetization tools, and integrates with advertising systems, subscriber management systems, authentication systems, and billing and payment systems.
One decision for online video providers, the potential OVP customers, is whether to use a managed service or license the technology, which is often running in the cloud, and run the service themselves. A managed service vendor will have a service level agreement, and the provider will be compensated if something breaks. Providers are turning to managed services not just to reduce cost, but also because the technology is moving so quickly. A managed service vendor handling OTT services for many customers will also have the advantage of economies of scale.
There have been a number of acquisitions of OVP vendors in the last twelve months, either by large cloud organizations such as IBM buying Clearleap and Google buying Anvato, or by content distributors buying technology for internal use like AT&T buying Quickplay and Disney’s investment in BAMTech. NeuLion’s purchase of Saffron Digital was the only case of consolidation in the sector.