OTT is entering an era of unprecedented growth and there is much further to go as mobile means the second screen becomes the first in many developing countries, says SeaChange CEO Jay Samit.

In today’s multiscreen world, the line is blurring between who is creating the content and who is consuming it. Ten years after the launch of YouTube, citizen journalists and social bloggers are commanding a greater share of the video market than broadcasters or cable operators ever imagined.

Before the advent of the digital age, content providers produced and consumers viewed. But one of the most significant benefits of multiplatform media delivery has been to bring the two closer together, empowering each to become better served in the convergence. As the cost of smartphones in the Third World approaches US$15, the second screen is fast becoming the first for many people around the world.

Of course, this kind of relational shift tends to disrupt Hollywood business models. Acknowledging that digital platforms have siphoned off a portion of linear TV ad revenues, 21st Century Fox executive vice chairman Chase Carey cut his company’s 2016 profit forecast by US$500m. In an article, however, Carey pointed out that while this shift in viewing will “put short-term pressures on our business,” it also represents “exciting longer-term growth opportunities.”

Jim Lanzone, CBS Interactive’s president and CEO, echoes that sentiment. Lanzone, who headed the launch of CBS’s All Access service, says: “Customers want more from us. They want it in more places, they want it sooner, and they’re willing to pay for it.”

As CEO of SeaChange, provider of the backend systems for major content delivery systems, our analysis supports this view. With broadband in 10 million US households that do not pay for cable or satellite TV, OTT is entering an era of unprecedented growth, especially with the addition of Starz, Cinemax, Nickelodeon, Movieplex, Encore and a raft of other premium direct-to-viewer services. OTT platform revenues are expected to skyrocket from US$3.3bn in 2013 to US$10.1bn in 2018. Moreover, revenues from streaming will exceed those of discs in 2016, while DVDs fall from their current base of US$12bn to US$8.5bn.

It’s a long way to come in five short years, and the good news is there’s an even longer way to go from here. In addition to Lanzone’s All Access service, HBO’s effort to pursue 80 million non-subscribing homes with an OTT service that “challenges Netflix, Amazon and others” is already attracting 17% of broadband homes. Of particular note is the fact that 91% of that group are currently pay TV subscribers and half of those would drop their pay service in lieu of the OTT offering.

Jeff Heynen, principal analyst at Infonetics, says: “OTT providers are expanding their relationships with traditional pay TV providers to get their apps and services integrated directly on consumer set-top boxes, gaining access to a much larger pool of current pay TV subscribers.”

Tech providers have invested heavily in this hybrid approach, and it is paying off. According to a recent PricewaterhouseCoopers report, it is estimated that 480 million homes in 40 countries will watch online TV and video by 2017. In that same timeframe, consumers in 65% of the world’s 475 million fixed broadband homes will watch television and video online.

Transitioning business models and consumer experience is not without its challenges, one of which is the need to elevate the quality of the consumer experience. A 2014 study by Verizon of millennials and entertainment found that “more than US$20bn in revenues are being left on the table due to poor-quality experience alone.” That will not stand. Success in the direct-to-consumer arena will depend on meaningful, relevant engagement and a detailed understanding of viewer preferences.

For content delivery vendors, this is the new frontier of entertainment. Seeing the horizon of opportunity stretching almost infinitely outward, a few visionary organisations are there now, on the ground, giving content owners, publishers and distributors the full complement of tools, professional services and partner integrations necessary to promote, monetise and deliver high-value media direct to consumers in the form and formats they desire.

On the baseline, OTT represents a meeting of content owner and consumer minds interested in elevating innovation and choice to a level consonant with the increasingly interconnected age in which we live. Now all content owners need to do is align with service partners and jump in to capture their piece of the new US$100bn OTT world order.