Revenue from linear OTT video services is set to rise to $7 billion worldwide by 2021, according to new research.

The new forecast from ABI Research shows this headline figure represents a 600 percent increase from the $1 billion revenues recorded in 2016.

The research firm suggested service providers in mature pay-TV markets were looking to better to compete with providers such as Amazon and Netflix.

This week, Netflix revealed that it had recorded its best ever quarter for subscriber growth.

ABI predicted service providers would decrease marketing for cable, satellite and IPTV products in favour of new OTT services.

However, the research firm noted that there are many technical challenges facing service providers in launching OTT video.

These include building robust content management systems, video transcoding and storage pipelines, application ecosystems and developing video distribution networks.

ABI cited AT&T’s purchase of Quickplay Technologies as an example of what services providers were doing to get around this problem.

“Despite the technical challenges, OTT services help pay-TV operators attract cord-cutters with a cheaper pay-TV alternative, as well as next-generation customers who never planned to subscribe to a traditional pay-TV service,” said Khin Sandi Lynn, Industry Analyst at ABI Research.

“Live OTT services, particularly sports packages, continue to gain the most traction, as they allow customers to watch the same live programmes that they receive through pay-TV services at a fraction of the cost.”

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