The Video Everywhere Conundrum (ET Telecom Blog Series)
Sanjay Kaul, Managing Director, Service Provider-Sales, Cisco India & SAARC
The article was published in ET telecom
Video services have never been more popular or more valuable. According to ABI Research, global revenues for pay TV have grown from approximately $150 billion to $250 billion in the past five years alone. But in this dynamic environment, service providers face new challenges. They include:
- New low-cost competitors: Ubiquitous broadband connectivity has lowered the barriers to entry for video services. "Over the top" (OTT) online video services are eroding incumbents' subscriber bases by offering a new, although limited, video experience at a low cost to the consumer.
- Rising prices for premium content: At the same time, the premium content that consumers desire (and that distinguishes full-service TV providers) has become more expensive as media companies and cable, satellite, and telco operators bid against each other for the most popular content. Together, these trends are squeezing profitability and forcing operators and service providers to re-examine how to best increase revenue and profits.
To meet these challenges service providers need to focus and adapt and evolve business models e.g. fully managed and hosted or as a combination. This lets service provider to focus on growing their business with options for leaving the infrastructure and management to specialists. A consumption-based model allows for the progressive migration of services starting from a lower cost base.
A new generation of Video Experiences
A unique and compelling video experience in today's evolving video marketplace is all of the following.
- Next-Generation Multiscreen : All video providers are moving to extend video services to all screens, from smartphones and tablets to gaming consoles, connected TVs, and more. To differentiate their offering, they have to take multiscreen experiences to the next level - delivering video in a more exciting, immersive, and engaging way.
- Contextual and Synchronized : Next-generation video includes synchronized experiences across screens, including the ability to pause viewing on one screen and "fling" it to another, letting users take the video experience with them on the go. It also involves delivering synchronized content such as alternative camera angles, character biographies, scores and statistics, and more to companion screens. Currently, 75 percent of global TV viewers already use another device as they watch TV. By integrating companion experiences directly with primaryscreen viewing, you can offer a more engaging viewer experience and increase ad inventory.
- Personalized "My TV" : We already expect a personalized media experience when we use the web, with our customized news feeds, favorites, and recommendations. As video choices proliferate, personalized content discovery becomes essential for TV as well. This is true for personal devices, where we already find content through search, but also for the big screen, where we want an easier way to navigate hundreds of channels and thousands of on-demand titles to get to the content we care about. Personalized recommendations can come from social connections, analytics-driven suggestions, and the viewers' own history - the content they've chosen to purchase and store.
- The next-generation video experience draws on the power of social networks to bring people together and deepen viewer engagement. It allows subscribers to have virtual viewing parties, as well as real-time instant messaging and video chats that augment the linear video experience. It also includes new social experiences and new ways to connect with other viewers around content with companion screen applications. Social networks are changing user behavior and consumption patterns; For instance, WhatsApp, and the consumption of video on Facebook and similar apps are really creating a lot of data and video traffic respectively.
- The popularity of mobile video continues to increase, and will account for a staggering 72% of total mobile data traffic by the end of 2019, according to the Cisco VNI report. Mobile video viewing was responsible for 55% of total mobile data traffic in 2014, and is likely to increase 13-fold between 2014 and 2019. Globally, IP video will represent 79 percent of all traffic by 2018, up from 66 percent in 2013.
This means that within Asia Pacific alone, video offers a business opportunity to the tune of $53.1 billion by 2019. The question is how to monetize it. To stay ‘relevant’ (as OTT video services extend to new consumer devices), video operators must not only offer competing multiscreen capabilities, but also go a step further and build a unified premium brand across all those screens. To continue winning the bidding for the best premium content, they must also find ways to build unique and compelling experiences around that content to increase subscriber loyalty and find innovative ways to monetize those experiences.
One way is to do this partly by creating the motivation for OTT players to share pieces of the action with service providers and partly by service providers offering compelling value propositions to OTT players. The ingredients of that value proposition are customer knowledge, security, reliability and experience. OTT, is a friend and not a foe. What operators need to do is to forge the partnership that creates a ‘value add’. Social networks are helping to create user behavior and consumption patterns and that is great for data business.
As multiscreen video becomes more synchronized, personalized, and social, we will see new applications that we can only begin to imagine today. Emerging services for in-home automation, security, home health and lifestyle applications, and more are just the beginning. To capitalize on new innovations, there is a need for a flexible, software-based video system that can grow and evolve with new customer experiences. Solutions architectures like The Cisco Videoscape help provide multiscreen experiences beyond the STB. They also serve as a foundation for the next generation of video experiences, which are personalized, synchronized, and social across screens.
With smartphone prices coming down, user behavior moving in the right direction and data – specifically video – growing at unprecedented rates, the fundamentals have been created to develop a profitable data business for service providers. It is for them to make the most of the opportunity.