"Are you ready for the new mobile gold rush? Of course you’re not," said Jim O'Leary, Sr. Manager Mobile Solutions Marketing at Cisco. "Though truth be told, the pending growth in mobile video may be more like a video tornado and only a handful of mobile operators are prepared."
What Jim O'Leary is talking about is the rapidly changing landscape of content viewing. Multi-device viewing is now the norm and the dumping of the old cable content bundle is well under way. Over-The-Top content (OTT), where content is consumed without going through the traditional gatekeepers such as the cable or satellite provider, is bringing complete and utter disruption to the cable and broadcast companies.
However, with disruption comes opportunity.
Video now accounts for the majority of global mobile data traffic and is forecast to be the key driver of data traffic growth globally. To date, mobile video (and the ability to monetize the content) has been dominated by Internet players, such as YouTube, Netflix, with the operator role simply one of connectivity provider.
However, a number of operators are developing their own content delivery platforms. Singtel, Verizon and PCCW are three prominent examples of this trend, with their HOOQ, Go90 and Viu video platforms respectively. While HooQ and Viu are variants of the subscription-based model, Go90 more closely resembles the Internet business model, with a reliance on advertising for revenues and a focus on millennials. - Jim O'Leary, Cisco
"Mobile operators across the world face the same twin challenges of slowing growth and ongoing disruption of core services by new Internet & OTT players, even as the broader mobile ecosystem continues to see significant revenue growth," O'Leary posted. "So if you are tired of being just an operator that carries mobile video and prefer to be able to monetize it, read on."
Mobile Video Watching is Booming!
O'Leary sees a significant monetization opportunity for mobile operators with video for a very good reason, the exploding growth in using mobile devices to watch videos. An On Device Research study commissioned by the IAB in 2015 (Download PDF) confirmed the changing landscape for mobile globally, with 35% watching more video on their smartphone versus last year.
In February 2016 Cisco released a study predicting that by 2020 there will be 5.5 billion global mobile users which is up from the 4.8 billion currently, and those millions of new mobile users will be watching video too!
More astonishing, the study says that by 2020 there will be 11.6 mobile-connected devices! This is indicative of another emerging trend, connecting ALL devices to the internet via mobile operators where internet content and data can be consumed and sometimes produced on and by these devices.
Gartner estimates that the Internet of Things (IoT) is currently connected to 6.4 billion devices and will connect to 20.8 billion "things" by 2020. Some of these "things" will be video enabled devices as well. For instance, watching a video of how to make vegan scrambled eggs on your refrigerator door!
Mobile Operators Can Play "Central Role" in Content
So mobile operators have massive connectivity with virtually everyone 12 years old and up having a smart phone and if they can play a central role in providing content they can benefit from the "emerging online video value chain." It's about using great content to boost usage of their mobile broadband service. O'Leary believes that Verizon, Sprint, AT&T and others should take advantage of this "content opportunity" in order to cash in and drive business growth.
The biggest impediment for mobile phone companies entering the video content space is their tendency to charge high rates for large bandwidth consumption. Mobile broadband carriers should eventually come to the realization that their businesses are tied to consumers needing them and it is in their interest to provide inexpensive ways to consume high bandwidth mobile content or they will by bypassed by new mobile broadband competitors that get it.
Mobile is the New Video Distribution Platform
O'Leary predicts that OTT, where the internet is used to bypass traditional content middlemen like cable, is the driving motivation that should entice broadband providers to enter the content space more aggressively over the next few years. He advocates mobile operators creating a "cloud based platform" and then partnering with content producers in order to "scale their video infrastructure efforts and deliver high-quality, live video and on-demand content to consumers on any device — be it their smartphone, tablet or connected television."
Content producers will likely consist of a wide variety of players from traditional sources like ESPN and Disney to well funded content upstarts such as such as Amazon, Apple, YouTube and Netflix. Content alliances between mobile operators may also include more direct deals with talent such as successful independent internet based content stars on YouTube, Vine and even Snapchat. Mobile is already the primary platform used to consume video content so the next step is to cut out the middleman and partner directly with popular content providers.
"In growing numbers, consumers are replacing their traditional cable and satellite TV packages with smaller, more customized, and often less expensive mixes of programming, cobbled together from an array of online and on-demand services," said O'Leary. "As more consumers replace their big-bundle TV packages with à la carte online offerings, an opportunity is emerging for mobile operators and other service providers to combine mobile broadband (MBB) packages with compelling “over the top” content."
Mobile operators should realize that they are the distribution platform for millennials, they are the network and they are the new cable and satellite companies. With that in mind, they don't need the networks or cable to drive viewership and usage of their platform, they simply need great content however they can get it, even if it means becoming content creators themselves.