Cisco forecasts that in 2016–2021 video traffic will grow from 73% to 82% of the global IP traffic which will grow from 1.2 ZB to 3.3 ZB. Operators have a big opportunity, but how can they make money out of this traffic?
In this paper we invite operators to face an increasingly competitive video service market by deploying video services that use their assets – subscribers, networks, and related services –, adapting them to contexts, and involving business partners. Of course, making the right technology choices is a must.
Operator as content aggregator
The most obvious action an operator can undertake is depicted in Fig. 1
Fig. 1 – Telecom operator as content aggregator
An operator gets licence of various types of content – live and on demand – packages them in one of more services and streams content to its subscribers (and potentially to anybody interested).
This type of business has several advantages: operator entertains a B2B relationship with Content Providers and an exclusive B2C relationship with its customers, bundles content with other operator’s offers, and can access exclusive content which is a potent fidelisation tool. Therefore operator has the opportunity of making big gains.
The cons are also significant. The first is that content licensing is a high stake business. The more affordable the content to operator the less attractive to customers, the less affordable the more attractive. Finding the right content may not be easy, particularly when the market is crowded with buyers who are often competitors. It takes time to creat a content aggregator culture, the key element upholding the aggregator’s value added. Expected big gains can easily become big losses, particularly because competition comes from a broad range of players: content providers, international and national aggregators, broadcasters and more.
Operator as service provider
Does this mean that an operator who does not have a high appetite for risk is barred from entering the video service business? Not at all. The operator’s assets are still so valuable that it is possible to change the business model above into another depicted by Fig. 2.
Fig. 2 – Telecom operator as service provider (baseline)
Here the operator offers content providers a platform that allows them to just upload content and be immediately in business. To be attractive the platform should provide additional features: access to operator’s subscribers (if operator so wishes), use of operator’s payment systems (if operator so wishes), and other services (if operator so wishes).
There are pros and cons to this business model. The pros: there continues to be a B2B relationship between operator and CPs – although of a different type, operator charges CPs for access to platform services, no big losses expected because the only CAPEX is the operator’s platform and even this can be reduced in case of revenue sharing arrangements. A far from marginal side issue, though, is that operator has time to develop a content aggregator culture for a possible time the previous business model becomes attractive again.
On the negative side there are additional (minor) investments compared to the previous business model, intermediated B2B2C operator-customers relationship and the prospect of less gains compared to a (successful) previous business model.
The business is not just pure content distribution. One should not think that the above business model is restricted to content providers in the traditional sense. Many companies see the need to extend their web presence beyond the usual media and incorporate massive use of video content. Examples are radios (on air and web), webzines, local broadcasters etc. These companies appreciate the stable and guaranteed operation that an operator can provide without the need for significant CAPEX. The possibility to outsource part of OPEX is a welcome plus.
In this context operators can play a role by offering customised enterprise-level video services bundled with access services.
What makes a video platform an OVSP?
All these features are not offered by any video streaming platform. Indeed, here is a first list of features that are needed:
- Multitenancy: concurrent users with different levels of independence
- Content creation: users can aggregate content to create new types of content
- Custom frontends: users can choose the look and feel of their services
- Internal DRM: content should have tags describing which right are available to whom
- Chained payments: one payment can pay more than one payee
- Content sharing: users can share certain content on social networks
An OVSP enables an operator to deploy not only the services depicted in Fig. 1 and Fig. 2 but also other services that involve new information providers.
Television on mobile
Television on mobile is a dream that may become true with 5G, but the question again is: how will operators make money out of it? Through their infrastructure? Maybe, but could not there be more valuable sources of content?
Let’s consider Fig. 3 where we assume that Advertisers (AD) are introduced.
Fig. 3 – Telecom operator as service provider (broadcasting)
An operator could offer CPs the possibility to deploy advertising-supported television services by using the “content creation” feature for scheduled services, and the “multitenancy”, “internal DRM” and “chained payment” features. Operators could charge CPs and ADs to access its services and to enable transactions between them. Operator coul offer more business models to its partners, e.g. new ways to monetise CPM. Operator could trial in advance 5G-enabled TV distribution, while still using 4G technology. All this at the cost of additional (minor) investments compared to the previous business model (again, possibly offset by revenue sharing arrangements).
There are many more possibilities enabled by a platform with the 6 features above. In Fig. 4 another possibility is depicted where merchants (MC) also play a role.
Fig. 4 – Telecom operator as service provider (interactivity)
Here the operator can offer CPs the possibility to deploy interactive video services by using another version of the “content creation” feature, again supported by the “multitenancy”, “internal DRM” and “chained payment” features. Operators could charge CPs, ADs and MCs to access its services and to enable transactions between them. Operator can offer more business models to its partners, e.g. new ways to redistribute revenues among merchants, advertisers and content providers. This will cost additional (minor) investments compared to the previous business model (possibly offset by revenue sharing arrangements).
We know that video services are vitally important for the future of operators, but we do not know which services will meet customers’ expectation and which business models will really work.
Video services are enabled by platforms but it is costly to develop one every time a new service is conceived and it is difficult to inherit user experience data from previous, typically related, services.
WimTV, the WimLabs Online Video Service Platform, has been conceived to enable an operator to take up increasingly expanding and rewarding roles as provider of a video service platform and related operator services. It has the flexibility to accompany operators to a journey where video distribution services become more profitable at each step.
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