In this two-part blog series, we first outline the motivating factors behind the ongoing telco IPTV transition to over-the-top or OTT video streaming service delivery, followed by an examination of major telco OTT initiatives on every continent. In Part 2 (coming June 28) we’ll go a step further by discussing the importance of a content-rich user experience, followed by a review of the OTT content protection measures essential to successfully licensing compelling programming.
A note on terminology: In this blog series we use the term over-the-top (OTT) to denote telco-managed video streaming services delivered over its own infrastructure, previously used for IPTV services, as well as “true” OTT video streaming services offered outside of a telco’s original IPTV service area to reach and capture new subscribers (to the extent permitted by content license and distribution agreements). The latter would include telcos utilizing broadband networks operated by others as well as fixed and mobile device 5G networks.
Motivating factors driving telco TV transition to OTT
It may come as a surprise to some, but telco TV is turning out to be a good news story, thanks to an accelerating global transition from carriers’ reliance on managed network IPTV technology to whole-hearted embrace of OTT channels and video streaming strategies utilizing their own as well as third-party networks.
However, just how good the news will be for each telco going through that transition greatly depends on some often-overlooked details about smart content security management that bear serious consideration. In a market where video content is king, supporting the protections demanded by license holders can be a kingmaker.
It’s clear why telcos, despite the impact IPTV subscriber attrition has had on their fortunes, are doubling down on their commitments to video. With cloud-driven transformation taking hold across the telecommunications industry, operators who pursue OTT agendas can do a better job of supporting the user experiences (UXs) consumers are looking for with greater operational freedom and at lower costs than was ever the case with IPTV.
As a result, they’re discovering there’s a big upside to delivering compelling mixes of live, pay per view, and on-demand programming that can be accessed on any device by any authorized user within and beyond their traditional service boundaries. Not to be outdone by competitors offering exclusive original programming, many carriers are even going so far as to invest in exclusive portfolios of both episodic and live sports content.
Indeed, there’s nothing more important to success in the intensely competitive OTT market than the ability to formulate a winning user experience (UX) with a programming package that’s second to none. That’s why the ability to support the robust content protection that’s essential to licensing programming with the greatest consumer appeal is mission critical.
As incumbent providers of telecommunications services, telcos who satisfy licensors’ requirements have a big advantage in the battle for multi-screen streaming rights. They not only have the ability to leverage existing customer relationships to build big revenue-generating audiences for license holders. They have the operational knowhow and infrastructural wherewithal to implement the personalized feature enhancements and ad placements that are essential to maximizing ROI for all stakeholders.
Industry advisors are taking note. In a recent analysis, telecom experts at the multi-industry consultancy Bain & Company remarked, “Today, the capabilities of over-the-top media architectures surpass minimum quality-of-experience requirements, while also allowing for easier add-on functionality. This significantly enhances the overall customer experience. Going forward, communication services will no longer depend on fit-for-purpose networks, thus opening a new chapter in the telecommunications market.”
Similar observations were made in a post by Kamal Bhadada, the president of communications, media and information services at Tata Consultancy Services. “There are huge opportunities here,” Bhadada wrote in reference to telco OTT. “Telcos have the chance to monetize their infrastructure assets by providing their own next-generation OTT content and smart home services as add-ons.” This is especially the case with telcos who are “taking advantage of 5G innovations to provide their customers with the kind of creative, value-add services previously only offered by OTT players.”
Of course, none of this would be happening were it not for the overwhelming impact of consumers’ embrace of OTT platforms and services. The global OTT market, valued at $121.61 billion in 2019, is expanding at a 29.4% CAGR on course to top $1 trillion by 2027, according to Allied Market Research, one of multiple researchers projecting such growth trajectories.
Major telco OTT initiatives on every continent
While telco OTT strategies vary widely, all have in common the pursuit of UX with maximum appeal in their targeted home markets and beyond. In some cases, carriers are abandoning IPTV services altogether, while, in others, they’re pursuing hybrid models aimed at retaining subscribers who prefer the old way of doing things as they go after the growing masses of consumers, especially in the millennial and Z generations, who don’t.
A multi-regional snapshot of major telco OTT operations reveals the scope of what’s in play:
- Europe – The region has been a seedbed for major telco OTT initiatives undertaken by telephone giants like Vodafone, Orange, Deutsche Telekom, and Telefonica, many of which encompass subsidiaries operating in other parts of the world. For example, France-based Orange, with more than 236 million customers in over 30 countries, has established itself as a key player in OTT TV worldwide. Similarly, U.K.-based Vodafone, has reconstituted itself across multiple European and Asian markets with a heavy emphasis on the reach afforded by cloud-based OTT delivery of its offerings.
- Latin America – Leading telco OTT providers’ services include:
- Mexico-based América Móvil’s Claro Video and Grupo Salinas’ Totalmovie, both of which are available region wide with permutations unique to different countries;
- Telefonica’s Movistar Play, also offered region wide with tie-ins to its Movistar TV pay-TV service in 13 countries;
- Colombian telco ETB’s in-country SVOD service HOTGO.
- Asia – Telco OTT providers abound throughout the vast region, including:
- Japan’s KDDI, which launched VideoPass in a joint venture with broadcaster TV Asahi in 2020;
- SK Telecom in South Korea offering Wavve in partnership with several broadcasters;
- Hong Kong’s PCCW, a pioneer in telco OTT with launch of its Viu service in 2015;
- Singtel in Singapore, which followed PCCW in a partnership with Viu that launched Singtel OTT in 2016;
- Several telcos in India, including Reliance with Jio TV and Jioo Cinema, Airtel with Airtel XStream, and Vodafone Idea (VI) with VI Movies and TV.
- Australia – Rather than launching their own branded telco OTT services, the leading Australian telcos, Telstra and Optus, have developed OTT management platforms that enable their subscribers to access with one-bill convenience any OTT service that chooses to participate. Taking a different tack, the third telco, Vodafone Australia, is offering a Roku-like media streaming device that allows consumers to view its own and partners’ OTT content on their TV sets.
- Africa – According to a report from international market research company Dataxis, multiple telcos across Sub-Saharan Africa are now offering their own OTT services, including MTN Nigeria, Orange Group, Safaricom (Kenya), Globacom (Glo, Nigeria), and Vodacom (South Africa).
- North America – Bell Canada has scored success with its Crave SVOD service. Telus (Canada), along with marketing Crave and STARZ as part of its Pik TV OTT package, offers multiple linear TV channels. The big exception to the overall trend line across Canada and Mexico in North America is what’s happening in the U.S. AT&T and Verizon have tracked a zigzagging course in the chaotic premium video market, ending in both cases with abandonment of self-branded OTT service strategies. AT&T was farthest along the OTT path with its rebranded AT&T TV streaming service. That offering and its subscriber base were converted to DirecTV Stream, a new service launched as part of AT&T’s spinoff of DirecTV and other assets into a standalone company under the DirecTV label. Verizon was widely reported to be preparing an OTT launch in 2019 but backed away with a change in management. Meanwhile, arch cellular rival T-Mobile has dropped its own short-lived foray into the telco OTT market, replacing support for its TVision service with marketing of online video YouTube TV and Philo internet TV to its customers at discounted rates.
While this list makes clear the powerful momentum behind the global transition to telco OTT video streaming services, the fact remains that there’s a vast number of carriers, large and small, who have yet to take the plunge. For them, and for many of those who already have, there’s the previously noted baseline challenge in content protection that must be met to ensure that, whatever approaches carriers take, they will be able to license the content they need to deliver the best possible UX. Stay tuned for the second post in this series or get in touch to discuss now.