U.S. OTT Market Outlook to 2030

U.S. OTT Market Overview

• The U.S. OTT market has seen impressive growth, reaching a valuation of approximately USD 50.29 billion, driven by factors such as the increasing availability of high-speed internet, a growing shift in consumer preferences from traditional cable to OTT platforms, and continuous content creation from major players. Content production budgets and advancements in streaming technology have allowed OTT platforms to cater to diverse audiences, solidifying their role as key entertainment providers.

• The OTT market in the United States sees dominance from cities like Los Angeles and New York, both hubs for media and entertainment industries, which bring forth content innovation and creation. Additionally, San Francisco stands out due to its role in technological advancements supporting OTT services. These areas provide a competitive ecosystem for OTT platforms with established infrastructure and access to cutting-edge content creation tools, supporting the market's sustained growth.
• The Federal Communications Commission's Rural Digital Opportunity Fund (RDOF) is investing over $20 billion to expand high-speed broadband infrastructure in underserved rural areas across the U.S. This initiative will increase internet access for millions of households, allowing OTT platforms to reach new audiences in these regions. By enhancing broadband availability, the RDOF directly supports the OTT sectors growth potential in previously underserved communities, enabling more consumers to access streaming content seamlessly.

U.S. OTT Market Segmentation

• By Content Type: The U.S. OTT market is segmented by content type, including Subscription Video on Demand (SVOD), Advertising-Based Video on Demand (AVOD), Transactional Video on Demand (TVOD), and Live Streaming. Recently, SVOD has taken the lead in market share under this segmentation due to its appeal in providing uninterrupted, ad-free content. Major providers like Netflix, Disney+, and Amazon Prime Video have strengthened their presence through original content, exclusive series, and a subscription-driven revenue model that appeals to diverse demographics across the country.

• By Platform Type: The U.S. OTT market by platform type is categorized into Mobile Devices, Television, Computers, and Gaming Consoles. Television holds a dominant market share due to its ease of use, larger screen size, and compatibility with high-quality streaming services, enhancing the viewing experience. With the increasing adoption of smart TVs, households across the U.S. prefer OTT streaming directly on TVs, fostering a trend towards device integration and family-friendly viewing options.

U.S. OTT Market Competitive Landscape

The U.S. OTT market is led by major players, including both well-established global brands and strong regional competitors. This competitive landscape highlights the influence and reach of these key companies.

U.S. OTT Market Analysis

Market Growth Drivers

• Increasing Internet Penetration: With robust internet infrastructure, the U.S. now reports over household internet penetration, according to the U.S. Census Bureau. The Federal Communications Commission (FCC) highlighted broadband adoption, noting that 64 million American homes have access to high-speed internet above 100 Mbps, supporting heavy streaming use. This connectivity supports OTT service growth, as each broadband subscription potentially equates to a new OTT user. Moreover, rural broadband initiatives by the U.S. government in 2023 allocated $65 billion to expand access, expected to further enhance OTT adoption by bringing broadband to underserved regions.
• Shifting Consumer Preferences (toward OTT over traditional TV): Consumers increasingly prefer OTT services over traditional cable TV due to flexible subscription options and diverse content offerings. According to Pew Research Center, traditional TV services continue to see declining subscriptions, while OTT platforms are rapidly growing in popularity, particularly among younger demographics. This shift reflects a substantial change in media consumption habits, establishing OTT platforms as a preferred entertainment medium, especially among younger audiences who favor on-demand streaming.
• Rise in Original Content Production (content acquisition, content production budgets): OTT platforms are investing substantially in original content, with Netflix, Amazon Prime, and Hulu collectively spending nearly $25 billion on original productions by 2024. This expenditure reflects the rising competition to offer unique, high-quality content to attract subscribers. According to the Motion Picture Association (MPA), content production budgets for OTT services have tripled over the past five years, with content acquisition costs now constituting around of OTT operating expenses.

Market Challenges:

• Content Licensing Costs: Licensing high-demand content has become increasingly costly for OTT providers. In 2023, OTT platforms in the U.S. collectively spent around $10 billion on content licensing, reflecting a 20% increase from previous years, as noted by the National Association of Broadcasters. This expense affects profitability, especially for smaller platforms that struggle to afford popular movies and TV shows.
• Bandwidth and Infrastructure Constraints: Despite high internet penetration, many rural regions in the U.S. still face bandwidth limitations. According to the U.S. Department of Agriculture, approximately 15 million Americans in rural areas lack high-speed broadband, which limits OTT accessibility. Platforms face technical challenges in delivering quality streaming services in these underserved areas, impacting their reach and user experience.

U.S. OTT Market Future Outlook

The U.S. OTT market is anticipated to see robust growth in the coming years, driven by technological advancements, diversified content, and a shift towards ad-supported models in addition to subscription-based services. A surge in consumer demand for flexible viewing options and innovative subscription models, coupled with an increasing emphasis on original content, will likely propel the market forward. The rising adoption of OTT services among various age groups, particularly younger demographics, will contribute to sustained expansion.

Market Opportunities:

• Expansion into Rural and Underserved Areas: With over 15 million people in rural areas lacking OTT access, expanding into these regions represents a substantial growth opportunity. Government initiatives like the FCCs Rural Digital Opportunity Fund aim to enhance broadband access, supporting OTT growth in underserved regions. These efforts are projected to connect an additional 5 million rural households, creating new viewership potential for OTT providers.
• Innovations in Subscription Models (e.g., freemium, ad-based, hybrid): OTT platforms are diversifying subscription models, with ad-supported and freemium options growing in popularity. By 2024, of OTT subscribers opt for ad-supported or hybrid models, according to the Advertising Research Foundation. These models attract cost-sensitive users and offer platforms new revenue streams through targeted advertising, estimated to reach $8 billion in ad revenue this year.