Report: OTT Video Closing Gap on YouTube

27 Jun, 2016 By: Erik Gruenwedel

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YouTube has been the most popular source of online video since the beginning of over-the-top video. That market leader position, however, is eroding as more consumers gravitate toward subscription streaming services such as Netflix, Hulu, CBS All Access and Amazon Prime Video, according to a new .

Nearly 30% of 1,086 respondents in a June survey conducted by Limelight Networks said they prefer watching Netflix & Co. over YouTube at 45%. The same survey last December found 26% of respondents favored OTT video services compared with nearly 50% for YouTube.

Facebook remained the third most-favored online video source at 7.6% — unchanged from December.

“Although this is only two data points, it might signal a turn in the market as consumers move away from lower quality, free content that is typically found on YouTube, to higher-quality content found through OTT service providers,” read the report.

With Netflix ushering in consumer demand for episodic programming, it follows TV shows remain the most popular content on OTT video, shadowed by movies. When respondents ranked the type of video they watch in order of frequency (1-5), they ranked episodic programs on top at 3.73, compared with movies at 3.64 and videos on YouTube at 3.13. While movie consumption edged up slightly from December, YouTube video frequency dipped (0.09) slightly.

“Most surprising, is the drop in ‘original content (YouTube),’ which coincides with the [OTT video] data. Consumers may be slowly moving away from lower-quality content, perhaps adding credence to YouTube’s push into premium content (i.e., YouTube Red),” Limelight said.

Driving online video consumption are Millennials, with 80% of the cord-cutting demo subscribing to an OTT service. More than 26% of respondents, who characterized themselves as Millennials, said they watched one to two hours of online video weekly in May 2015 — a percentage that dropped to less than 16% in June.

At the same time, consumption of more than 10 hours of online video per week jumped to almost 23% in June from 15.6% in May 2015. Online video consumption from 2-4 hours increased to 23% from 20%.

“Although Millennials are equally concerned with [other demos about] rising cable prices (29.5% said they would terminate because of price increases compared with 29.3% for everyone else), they are significantly more amenable to terminating a pay-TV subscription if they can access the content they want online, directly from the content owner (23.7% compared with 16.6%),” read the report.

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