Day 1 C2C Summit July 2016 - Video Strategy in Ultra-Broadband Era

1. Video Strategy in Ultra-Broadband Era
Ian Valentine
Huawei Consulting

2. 2
Imagine…

3. 3
Agenda: 3 Reasons 3 Challenges 3 Opportunities

4. 4
-
50,000
100,000
150,000
200,000
250,000
2013 2014 2015 2016 2017 2018 2019 2020
US$(millions)
Telco TV revenues
Consumer broadband
revenues
For the top 10 players, Video revenues now counts for ~30% or more of their total
fixed revenues
By 2020, Video business will be worth $80b to telco operators in subscription
revenues alone – adding 35% to consumer broadband revenues
Video revenues as a % of total fixed revenues, Q4 2015
17%
21%
23%
24%
24%
24%
26%
27%
28%
28%
29%
31%
33%
33%
35%
36%
39%
44%
49%
57%
Slovak Telekom / Deutsche Telekom
Magyar Telekom / Deutsche Telekom
Airtel
Romtelecom / Deutsche Telekom
Verizon (FiOS)
Telefonica [Colombia] (Movistar)
Telefonica [Chile] (Movistar)
AT&T (U-Verse / DirecTV)
Telefonica [Peru] (Movistar)
Korea Telecom (Olleh TV / Skylife)
Bezeq (Yes)
Iliad (Free)
TDC / YouSee
Canal Digital / Telenor
America Movil [Colombia] (Claro)
America Movil [Chile] (Claro)
Get / TDC
America Movil [Brazil] (Claro / Net)
Vodafone [Germany] (Kabel Deutschland)
Reliance
Source: Ovum
Source: Ovum
Telcos with no Video strategy are missing out on huge revenue
growth potential
Video is an essential driver of telco revenues

5. 5
Telcos have been very successful in using bundling to protect traditional revenues, reduce
churn and increase consumer ARPU
70% of consumer broadband lines will be part of a bundle by 2020
Over 45% bundles will include Video
Typical churn rates by bundle (W. Europe)
Bundle Typical level of churn*
Single play broadband 20-25%
Dual play 15%
Triple play 10%
Quad play 5%
* Can differ greatly depending on market conditions
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2013 2014 2015 2016 2017 2018 2019 2020
Dual-play broadband
Triple-play broadband
Quad-play broadband
Other broadband bundle
combinations
Single play broadband
%ofconsumerbroadbandlines
Source: Ovum
Telcos without a Video strategy will find themselves at significant disadvantage Source: Belgacom
Belgacom revenue example
Video is an essential element of the telco business

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• Over 50% of all broadband users in Ovum’s surveys access Internet TV and video
• This has enabled companies like Netflix to quickly gain a foothold in the market,
which will reach over 25m subscriptions by 2020
• However, Telco TV providers also need to take advantage to enhance their own
pay-TV services and further monetisation
Source: Ovum
Source: Ovum
Source: Ovum
Video will be the core service by 2020
Telco TV OTT offerings % of total players
Any type of OTT offering 91%
Multiscreen / multiroom service 66%
‘Netflix-equivalent’ telco-OTT apps 33%
3rd party content apps 23%

7. 7
Revenue
Growth
Be the core service
Agenda: 3 Reasons
3 Challenges 3 Opportunities

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2016-icasa
R147,339 million
Annual -4%
RSA Telecommunications Sector
Video is a key battleground
Next generation, service oriented digital home,
with entertainment at its heart
STRATEGY DEMANDS: Think like a TV Operator
Communications
Industry(RSA)
Convergence & CompetitionChallenges 1
R28,689 million
Annual 7%
RSA TV broadcasting Sector
< R200,000 million?
Multi Play
Operator
Converged Industry

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How
viewers
pay for TV
Advertising
Payments
Interaction
Engagement
Scale is a pre-requisite
to Monetisation
Challenges 2
Monetisation

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Transformation ….Challenges 3
Video is the core traffic
Becomes Commodity
Developing Markets
Usage Based
Developed Markets
Video focused
Quad Play
Value based Subscriptions
Time
Direct Revenue
Video & Services
Ecosystem
Advanced Markets
?
Usage Based revenues decline Subscription based services
Becomes Bundling War
Usage based Commodity

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Becomes Commodity
Developing Markets
Usage Based
Developed Markets
Video focused
Quad Play
Video & Services
Ecosystem
Advanced Markets
?Becomes Bundling War
Watch the River Build a Water Wheel Own a Dam….
Three Basic Steps to “Harness Video”

12. 12
Revenue
Growth
Be the core service
Agenda: 3 Reasons 3 Challenges
3 Opportunities
Convergence
Monetisation
Transformation

13. 13
Market opportunity for Super AggregatorOpportunity 1
Imagine this TV Service Description:
• Main UI is a folder
– Apps only display logos not content
• Channel Change time:
– 30 seconds
• Global Discovery tools (e.g. Search)
– None
• EPG
– No
• Usability
– Every channel is different
• Content items surfaced to user
– Never, its like a Mall were the shops have closed doors, with just a logo on!
• No overarching personalisation
What a terrible, fragmented user experience !
Thinking about Apps as channels
and the device as a TV:
My “Entertainment
Folder”

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The Smart Video NetworkOpportunity 2
Video Origin
PaaS
SaaS
Video Solution + Network
Video Network
Video Origin
U-CDN
IP Data Network
Time-Shift
Network PVR
Content API
Devices API
SystemsAPI
CarrierAPI Hybrid Video
Platform
Content API
Devices API
Systems
API
Carrier
API
Hybrid Video
Platform
Content API
Devices API
Systems
API
Carrier
API
Other Video
Platforms
Content API
Devices API
Systems
API
Carrier
API
Other Video
Platforms
IP Video Network
Video Functions
Video Services
Security & QoS
Video Delivery

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Opportunity 3
Video as the new voice
• Number resolution
• Connections
• Switching
• Connection Rate
• Interoperability
• QoS
• Content discovery
• Live feed distribution
• Video Manipulation & Security
• Cloud Services
• Interoperability
• QoS
Customer Segment 1
(e.g. Viewers)
Customer Segment 2
(e.g. Publishers)Value Add
Voice WAS an Ecosystem Video is BECOMING one
(Publishers) (Viewers)

16. 16
Revenue
Growth
Be basic service
Agenda: 3 Reasons 3 Challenges 3 Opportunities
Convergence
Monetisation
Transformation
Super Aggregator
Smart Video Network
Video as new Voice

17. Copyright©2016 Huawei Technologies Co., Ltd. All Rights Reserved.
The information in this document may contain predictive statements including, without limitation, statements regarding the future financial and operating results, future product portfolio, new
technology, etc. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied in the predictive statements. Therefore, such
information is provided for reference purpose only and constitutes neither an offer nor an acceptance. Huawei may change the information at any time without notice.
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