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– 1 –We make ICT strategies work
Tim Dörflinger, Detecon International GmbH, South AfricaIAD Summit 2015, Victoria Falls, Zimbabwe
15.04.2015
“Telco and OTT partnerships – the way ahead in a changing industry?”
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Our lives are constantly reshaped by innovation, in the Telco sector the trend
setters are now the OTT players
Introduction: The drivers for fixed and mobile data growth
Innovation in the field of ICT products and services is significantly changing human communication behavior and drives data usage on both fixed and mobile networks.
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The drivers for fixed and mobile data growth Selected quantified global data drivers
+4%
2019
8.506
1.782
4.383
2.341
2013
6.657
4.531
1.919207
<3G3G4G / LTE
+1.029%
+128%
-69%
Mobile Subscribers (in Million)
97 341
159
2019
365
25
+6%
2013
256
Regular TVsSmart TVs
TV Device Sales (in Million)
+721%
-86%
Source: IC Intelligence Centre (2013) - TV Devices ForecastsSource: Ovum (2014) - Mobile Subscription and Revenue ForecastSource: Ovum (2013) - Global Cellular M2M ConnectionsSource: Strategy Analytics (2013) - VoLTE, OTT Voice & Video Call Forecasts
494
199
2013 2019
+16%
M2M Connections (in Million)
+% Compound Annual Growth Rate (CAGR)
185
2013 2019
1.636
+44%
Active Videocall* Accounts (in Million)
* e.g. Skype and Facetime
Trends and challenges: The rise of OTT players
The number of OTT players that offer fully “location-independent” innovative services is constantly growing, attracting millions of subscribers with on a global scale.
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OTT Landscape - Overview of the most dominant OTT players
Source: Detecon Research 2014
Regulatory Challenge: Deregulation of Telcos vs. Regulation of OTTs?
Trends and challenges: The current regulatory imbalance
As a new regulatory balance is not yet in sight, operators need to act quickly on their own to cater for these challenges and develop adequate OTT response strategies.
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Growing Imbalance between Telecom and OTT universe
Limited/ no regulation (No service license required, interconnection not mandated)
Internet based standards (IETF) Rapid growth Low, scalable investment
Limited direct employment IP based Disruptive models (free, freemium,
ad based etc)
OTT| Communication Universe
Heavily regulated industry (e.g. SLAs are included in the service license)
Telco based standards (ITU) Limited/ slowing growth High pre-investment required
Significant employer Moving towards IP Traditional business models
Subject to national tax regime Usually subject to universal service
obligation
Telecom Universe
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Operators find themselves at a cross roads and need to take a strategic decision…
Trends and challenges: Operators at the crossroads
Operators need to carefully decide how to deal with OTT players as their different types of business models may determine the sustainable future of operators business.
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OTTs’ business models develop at a fast pace and change the traditional revenue split
Advertisement is the main revenue source of many OTTs.
Paid subscriptions start to work for larger customer base OTTs
Fremium apps have thrived as a innovative monetization strategy
Cloud storage as an add-on service has ramped profitability
Business Intelligence is the most powerful tool of content distributors
Best-effort free services cannibalize traditional revenues
Flexibility and innovation are the only way operators can monetize on future opportunities
Operators face a crossroad regarding OTT impact on their business OTT Business Models
Service deployment over time
Prof
itabi
lity
leve
l ove
r tim
e
OTT Business Model Refinement & Maturity
Strategic decisionneeded
OTT Perspective Operator Perspective
Voice and Messaging
High Bandwidth Video
Solution: Operator response strategies
In principle, Telco operators can choose between three strategic directives to mitigate the impact of OTT players on their core business: Defend, Attack and Co-Operate.
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Overview of the most common response strategies for Telco operators
Product / Service Partnerships
Block OTT Services
Neutralize OTT Effects
Do Nothing (Zero – Option)
1 Defense Strategy
Attack Strategy
Emulate OTT Services
Co-operate Strategy
Acquire OTT Players
“Sponsored Data” Approach
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Recently Announced OTT – Telco Partnerships
The amount of partnership deals closed between Telco operators and OTT players is increasing on a global scale. Cooperation appears to be the preferred way ahead.
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OTT Partnership Case Studies
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Movistar (Spain) and HBO have signed an agreement that will allow Movistar to broadcast HBO’s flagship series Game of Thrones, Boardwalk Empire and Girls on Movistar’s VOD service
Jan.2015
Companies Deal Description Announcement Date
Jan. 2015
Bouygues Telecom (France) has signed a deal to offer Spotifystreaming music services for its high-end mobile plans. This will allow Spotify to potentially access 10 million subscribers
Dec. 2014
Tigo (Rwanda) has collaborated with iRokotv, the world’s largest legal distributor of African movies. Tigo will provide a subscription based service for Tigo 4G subscribers, who will have unlimited access to iRokotv video on demand archive
Dtac (Thailand) and Facebook have partnered to bring more affordable Facebook access to its users. This partnership will offer free access of Facebook services up to six months
Oct. 2014
Safaricom (Kenya) collaborated with Google to launch Google Free Zone, enabling its subscribers to access Google services, including Google+, Gmail, and Google Search, free of charge
Mar. 2014
Sources: Detecon Research 2015, Ovum 2015
Airtel Nigeria and WhatsApp
Partnership between OTT messaging player WhatsApp and Airtel Nigeria
Exclusive WhatsApp-branded mobile data plan from Airtel to compensate SMS revenue loss and increase brand perception
The partnership has been extended regionally to other AirtelMarkets (e.g. India) and to include other OTT platforms such as Twitter and Facebook
OTT Messaging Monetization
Nigeria
Affordable Access through OTTs
Internet.Org & Google “Loon”
OTT players such as Facebook or Google investigate “affordable internet access” solutions
Internet.Org is a partnership between Facebook and mobile operators to deliver access to basic internet services for free
Google is investigating commercially viable ways to provide internet access to remote areas using high-altitude balloons
Google Freezone provides access to Google services free of charge
Selected Case Studies: Overview
The following case studies were chosen to discuss different types of Telco & OTT partnerships, both from a regional as well as an OTT offering perspective.
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OTT Video, Gaming, Music
MTN creates the content platform MTN Play to reduce usage of OTT content and increase brand perception
Subscribers get mobile access to content such as games, news wallpapers, ringtones, music, and videos
MTN Play is now available to MTN subscribers in 22 Markets in Africa and the Middle East
Integration of Simfy Music Streaming into MTN Play portfolio
Video, Gaming, Music Monetization
South Africa
Dr. Christoph SchetelichManaging Partner / VP Southern Africa
Detecon International GmbHBuilding 27, Woodlands Office Park,Woodmead 2191, South AfricaMobile: +27 84 777 9710e-Mail: [email protected]
Your Contact Persons
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In case you have any questions or would like to initiate further discussions, please contact our topic experts at Detecon’s regional office in Johannesburg, South Africa.
Dr. Steffen OehlerManaging Partner
Detecon International GmbHBuilding 27, Woodlands Office Park,Woodmead 2191, South AfricaMobile: +27 82 654 1751Email: [email protected]
Tim DörflingerManaging ConsultantDetecon International GmbHBuilding 27, Woodlands Office Park,Woodmead 2191, South AfricaMobile: +27 82 321 6730 Email: Tim.Dö[email protected]