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OTT TV: A Telco threat or opportunity?

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An assessment of the OTT TV opportunity and threat for telecom operators in the Middle East.

An assessment of the OTT TV opportunity and threat for telecom operators in the Middle East.

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OTT TV: A Telco threat or opportunity? OTT TV: A Telco threat or opportunity? Presentation Transcript

  • OTT: A Threat to Telecom Operators?
    Presentation to SAMENA, April 2010
  • 2
    • How much of a threat are global OTT players to telecom operators?
    • Why should telecom operators get into the digital content game?
    • Which roles should operators play in the digital content ecosystem?
    • What are the specific opportunities inherent to the Middle East market?
    • Which model is best for digital content, in-house or outsourced?
  • 3
    Consumers in the region are well-served by international and regional web-based video providers
    Regional players
    International players
    Source: thenextweb.com
  • 4
    Consumer behavior in mobile is changing with the proliferation of smartphones and applications usage
    Average time spent on various mobile functions
    Global unit shipments of desktop PCs, notebook PCs, vs. Smartphones & tablets (2005-2013E)
    NEW ACTIVITY
    Mail app
    All Other
    • Maps
    • Game
    • Social Networking
    • Utilities
    • Other
    Telephony
    • Phone
    • Skype
    • Messages
    Web / Web apps
    Source: Morgan Stanley research Source: AppsFire
  • 5
    Key Regional Internet facts
    • 13% of MENA search queries are from mobile devices
    • 50% of all mobile traffic is from Symbian devices
    Mobile Internet
    Video
    • Arabic users love Videos:
    “KSA is in the top 3 mobile playbacks worldwide” (YouTube)
    Language
    • Queries in Arabic represent:
    • 54% of MENA queries
    • 70%of Egypt queries
    • 80%of Saudi queries
    Source: Google
  • 6
    The advent of these global OTT players is not necessarily bad news for telecom operators
    Increase in data traffic
    Higher ARPU
    iPhone user
    US
    1.63
    ARPU of the average customer
    Western Europe
    2.45
    Source: Booz & Company
  • 7
    However, dis-intermediation does present risks
    Risks
    Dis-intermediation of telcos
    User Interface control
    • No control of the user interface: telcos do not capture the full value from the new business
    Digital content value chain
    Content1
    Billing,
    Care &
    Analytics
    Network
    (content
    distribution)
    User
    Inter-
    face
    Content
    Mkg
    & Sales
    Service
    Design &
    Delivery
    Churn
    Telcos
    Telecom operator’s / pay TV provider’s core expertise areas
    Up to 25% of Smartphone users are at risk of churn if they could not access specific content & apps via their operator(AnalysysMason, Jan’11)
    Content players
    Traditional media owners
    Digital media solution providers
    Cannibalization
    • New services tend to cannibalize telcos’ core business: e.g. voice revenues (Skype & Nimbuzz apps)
    Telecom operators and pay-TV players lose the relationship with end-users and become “dumb pipes” in the digital content value chain, at the benefit of other providers
    (1) Creation, production, adaptation, acquisition, management
  • 8
    Telcos should get into digital content, but this is not where the money is for them
    Mobile revenues in selected regions & countries, by type (2009)
    Projected market size
    $7bn
    Apps sales (2013E)
    $40B
    $75B
    $82B
    $21B
    $162B
    $37B
    $18B
    Content
    1%
    2%
    4%
    5%
    5%
    6%
    10%
    12%
    8%
    13%
    9%
    10%
    P2P
    messaging
    18%
    9%
    $1.6tr
    10%
    Telecom industry revenues (2013E)
    8%
    11%
    7%
    Other Data
    40%
    37%
    23%
    Voice
    A drop in the bucket
    0.4%
    Apps sales represent only of overall projected telecom revenues in 2013
    Middle East
    India
    USA
    Korea
    China
    Japan
    Africa
    Source: Informa Global Content Forecasts 2008-2013, and Mobile Operator Revenues Update 2010 Q2. Source: Booz & Company
  • 9
    The real economic value of digital media for telcos is to strengthen their core business through…
    Increasing ARPU
    Reducing churn
    Acquiring new customers
  • 10
    In the Middle East, global competition is weakenedby specific factors…
    The regional opportunity is very small compared to other regions
    Global players do not have access to local / Arabic content
    Entertainment & media market by region
    (US$ billion)
    They might be restricted from operating in the region (licensing & regulatory constraints)
    Source: PWC
  • 11
    Better access to local content
    … and telcos have an opportunity to leverage unique differentiating levers
    Billing relationship
    Telecom operators’ differentiating levers
    Particularly relevant in the Middle East
  • Positioning in the digital content value chain—Operators have a choice to make
    12
    Network-focused
    Content enablers
    Content players
    • Compete on price, coverage, flexibility
    • Wholesale capacity provider to MVNOs & SMART players
    • Drive traffic
    • Network open to all content providers
    • No direct investment in developing content
    • Management of device & content experience
    • Heavy investments required
    • Strong brand required
    • Compete on being trusted partner for 3rd party content partners
    • Open network to 3rd parties
    • Leverage assets to enhance 3rd party content & services
    • End-to-end customer experience ownership
    • Branded devices, content, services
    • Mixed revenue models, including advertising
    • Retain control over customer experience only related to core offerings, not for all content
    • Focus on own content only in 1-2 areas
  • 13
    Intigral brings value to each stakeholder in the digital content ecosystem
    Intigral value proposition to its content ecosystem partners
    Telecom operators
    Content owners, application developers, content creators
    End-users
    Mobile storefronts
    IPTV/ OTT TV EPGs
    Advertisers
    Web portals
    Wide end-user reach
    End-to end content solutions: aggregation, development, delivery
    One-stop shop for all digital content – across 3 screens
    Targeted advertising capabilities
    Multi-screen reach
    Locally relevant content
    Intigral’s Value Proposition
    Customer analytics data
    Flexible solutions e.g. Managed Services
    Multi-screen ad delivery
    Rich & enhanced features
    Monetization opportunities – e.g. advert, billing relationship
    Multi-format ad delivery
    Multi-screen capabilities
    Broad choice of content
  • 14
    Intigral’s tight relationship with 250+ content providers is a clear differentiator in the market
    Content Provider
    • Needs
    • Customer analytics
    • Marketing & Promotion support
    • Access to multiple operators
    • Multi-platform
    • Offer
    • Customized & local content
    Intigral
    • Offer
    • Customer analytics
    • Billing
    • Customer Care
    • Marketing & Promotion
    • Needs
    • Targeted and local content
    Examples of partnerships
    Strong portfolio of Content Provider partners
    Supplier account management program
    Health content provider DMC developed their own iPhone application
  • 15
    Nadeek – STC’s Sports portal
  • 16
    Online, telcos can combine the self-care features of their portal with locally sourced content
    Local multi-player online game…
    … Integrated into m3com, STC’s multimedia portal
    • Traffic (1m unique visitors /month)
    • Billing relationship for paid games
    Benefits to Jawaker
  • 17
    Bringing Cinema at Home to STC’s invision subscribers
    Objectives: stimulate VOD usage (existing customers), build invision brand awareness and support invision acquisition
    Run dates: 17 March 2011 - 11 April 2011
    Activated free channels:
    • Invision website + M3com website
    • Invision YouTube channel
    • MMS
    • Email shot
    • TV guide
    • On STB
    Activated Pay media:
    • Print media
    • Radio spots
  • 18
    Newspaper, Radio and MMS Shot
  • 19
    Digital and video creative produced by Intigral run across STB and web platforms…
    On box promo
    Invision.com.sa
    YouTube
  • Thank you
    © 2010