Whether it’s the smart TV market approaching 200 million units, with people returning to their living rooms and increasingly willing to spend more time watching TV, or because the traffic growth driven by mobile internet has hit its ceiling—and now requires new avenues for expansion—there’s no doubt that 2018 marked another year of explosive growth for OTT platforms.
What changes will the OTT advertising market see in 2018? And which trends are worth paying attention to? Based on data reports from eMarketer and AVC, we’ve summarized three key trends driving OTT industry development—spanning across content, devices, and ad monetization.
Content Landscape: iQIYI Continues to Thrive, Closing the Gap Among the Big Three Titans—BAT
According to eMarketer's forecast, nearly 229 million people in China will be watching videos via paid subscription streaming services in 2018.

This year, 37% of China's digital video viewers will use OTT video services to watch online content, such as iQIYI, Youku Tudou, or Tencent Video.
eMarketer predicts that the subscription OTT market in China will grow steadily over the next few years, thanks to investments in original content. In 2017, China’s subscription OTT market experienced growth exceeding 80%. By 2019, more than two-fifths of Chinese online video viewers were expected to use OTT services.
Currently, China's OTT market is dominated by BAT—iQIYI under Baidu, Youku from Alibaba, and Tencent Video owned by Tencent. Although iQIYI remains a strong player, the gap between these three major platforms is expected to narrow as they continue to invest in and refine their content strategies. In 2017, iQIYI led Youku by nearly 5 percentage points; however, by 2018, the gap between the two had narrowed to less than 4 percentage points.
Looking at the average daily VV (video views), iQIYI’s TV+ box leads with a robust 268 million VV per day, solidifying its position as a powerhouse platform. Digging deeper, on the TV side, Tencent Video’s Cloud Vision Aurora boasts the highest playback volume, while on the box segment, thanks to the strong presence of Tmall Boxes, Youku CIBN Kumo Film & TV delivers the top performance, reaching an impressive 117 million views.
Terminal landscape: Boxes face awkward positioning, while policy remains a key variable.
According to comprehensive channel data from AVC, China's OTT box market saw sales volume of 10.47 million units in 2017, a 24% year-on-year decline. Meanwhile, revenue fell by 21% compared to the previous year, totaling 2.4 billion yuan. Beyond the "challenge" posed by smart TVs—highlighting the awkward positioning of OTT boxes themselves—their survival has also consistently depended on shifting policy dynamics.

According to data from AVC, the number of smart TVs activated at the end user level reached 129 million in 2017, compared to just 97.29 million in 2016—still below 100 million units. This represents a remarkable growth rate of 32.8%. In contrast, OTT boxes saw much slower growth, with activations totaling 38.42 million units, marking an increase of only 20.5% over the same period.
From a brand-scale perspective, the Matthew effect is strikingly evident: the six traditional TV brands (Skyworth, Hisense, Changhong, Konka, Haier) account for 69% of terminal activations, while internet-based TV manufacturers like LeEco, Xiaomi, Storm, PPTV, and Fengxing collectively hold only 10%.
On the device side, Xiaomi and Tmall Box together account for 61% of total activated OTT devices, making them the only two major OTT box manufacturers in the market.

Looking at the historical changes in the OTT box market size over the years, it’s clear that OTT is closely tied to policy dynamics. In 2010, during the initial launch phase, OTT box sales remained below 100 units. By 2012, as the industry entered an exploratory phase, despite the first wave of policy measures, their impact on the market was relatively mild—though these policies would ultimately prove to have far-reaching consequences. By 2013, as OTT surged into its growth phase, the concept suddenly became wildly popular. This led not only to a flurry of new box brands entering the market but also marked the debut of internet-based TV brands on the scene. The OTT industry experienced a surge of excitement, yet this rapid expansion also gave rise to significant market chaos—and, unfortunately, laid the groundwork for increasingly stringent regulatory actions. After years of turbulence spanning from 2013 to 2014, 2015 saw the emergence of stricter government oversight, which directly contributed to a decline in sales that year. However, by 2016, the OTT market began to stabilize as policies matured and regulations took hold. Still, despite this newfound stability, the industry has struggled to regain its former glory.
Big-screen attention is 30% higher than on smaller screens—yet data fragmentation remains a major challenge for OTT marketing.
The process of advertisers testing OTT advertising is largely consistent with their approach on PC and mobile platforms—starting with the traditional OTV strategy, focusing primarily on pre-roll ads and multi-screen integrated campaigns. However, they’ve since begun to explore the rich and diverse ad formats available on OTT channels, leveraging the unique characteristics of each viewing scenario to develop innovative new ad formats.
Currently, combined ad placements have become the preferred format among brand owners. According to OTT advertising campaigns monitored by Second Needle, coupled with insights from corresponding online surveys of these campaigns, the research reveals that using a combination of ad formats results in a lower cost-per-thousand impressions (CPM) compared to relying on just one single ad format. Specifically, the data shows that the effective CPM for a standard ad spot is 181, while combining it with a pause feature reduces the CPM to 126. Interestingly, when the ad spot is further enhanced with an additional corner marker, the CPM drops even further, landing at 107.
In 2017, the reach performance of the OTT advertising resource portfolio outperformed the overall industry average.

From an attention perspective, large-screen devices capture 15%–30% more viewer attention compared to small-screen devices, resulting in ad value that is 3 to 4 times higher overall. Among the various OTT advertising formats, startup ads deliver the strongest overall performance, while pre-roll ads excel in terms of memorability. Additionally, the effectiveness of different ad placement combinations can be flexibly adjusted and balanced with one another.
However, OTT advertising also has significant drawbacks. At its core, OTT marketing still relies on big data. Breaking through data silos and leveraging unique, scenario-specific data powered by more efficient algorithms will create an "energy pool" that fosters meaningful connections with users. This approach not only enhances efficiency but also serves as the cornerstone for exponential growth in the OTT space over the next three years—ultimately benefiting the entire industry.