(Extracts from the keynote speaker session by Wavenet CEO, Suren Pinto, at MWC event in Shanghai 2019)
Wavenet is a VAS and digital pioneer in the telco industry operating for over 16+ years. We operate in the digital transformation space and focus on delivering world-class VAS media and customer experience software solutions, helping telecom operators to increase revenue, decrease cost and improve customer experience.
If we talk about video streaming in particular, we initially saw WAP Portals, then came the legacy handsets, and then the trend in delivering mobile TV with attempts to deliver on the ideal TV experience to customers.
A decade ago, the video world was very different for operators, with complexities that included poor user experience due to low bandwidths and complex technologies such as JAVA apps and browsers. But this was the first iteration of video streaming at the time.
Today, there is a paradigm shift, which means media, streaming, and TV is now moving from legacy delivery channels such as TV, to the mobile channel space, and the mobile space alone comes with it huge potential. According to global IP traffic stats from CISCO, by 2022, PC traffic will account for only 19% of IP traffic in the world, 44% of IP traffic will be mobile, and 82% of all global IP traffic will be video. The video opportunity is huge in the market, and it is only going to grow in future.
What is driving this shift?
What is really driving this shift is the OTT players in the market. They came into the market and created amazing user experiences for consumers, then leveraged the technology already available to them to start driving market demand for video.
According to CISCO, video on demand of consumers will double by 2022. 70% of YouTube views are via mobile. If you look at the top five OTT players, companies such as Netflix and Oulu are the companies delivering slick video experiences to customers, so they are the ones who are really driving this shift in the market!
For the telecoms industry, this means that there’s a great opportunity. Today, we already see successful collaborations between the OTTs and telco operators. There are about 130 operators offering video service solutions in some form of collaborative model that helps them to monetize revenue through video. Telco carriers need to understand how to monetize video, as it’s going to be one of the biggest revenue generation avenues in the next couple of years. You can see that the opportunity largely exists for them from the figures above.
Determining Content Strategy for Rollout
When carriers are rolling out a video service, it is important to understand a couple of things. For example, there are four possible quadrants that carriers can roll out a video service with content generation strategy with two areas related to business, and the other two related to technical services. Looking at the business drivers for consumer services, content has, and will continue to become king. Developing content therefore can come in the form of following four ways.
Acquiring content from production houses: Production house content forms a more convenient way to acquire licensed content for carriers.
Acquire from aggregators: Aggregators in the market provide economies of scale. When you license content directly, its more expensive and aggregators are able to mitigate this with scale.
Develop own content: Netflix, for example, is said to have invested $ 8 billion on its own content in 2017 (source: NYTimes). This is a far more resource-intensive operation for producing content.
The Community – The UGC (User Generated Content): These are the YouTubes of the world, where users can create their own content and upload these to a platform.
These form the four opportunities for content creation for an operator, and telco/mobile carriers need to understand the appropriate content acquisition strategy that works best for their own organization.
The Commercial Model for Monetizing
When it comes to monetization, we see the following options available for carriers.
The Bundling Model: This would be an advantage that carriers have through the bundling of video content along with other operator services to monetize revenue from video.
The Subscriptions Model: offering subscription-based revenue mechanisms from video services to consumers.
The Advertising Model: Telco carriers have not utilized this option to its fullest potential and have not been a very popular model for monetization but one that may have great potential.
The Content Syndication Model: This the option that carriers must have when producing their own content.
We will talk about the ‘platform’ and our new proposed ‘Hybrid model for monetizing video next, which will be Part 2 of this blog.