The Mobile Network Operator (MNO) role has once again expanded – from enabler of voice transmission to data, and now, to a channel for video content. In this article, we review the growth of online video on mobile devices and consider the questions that service providers should be asking themselves in this age of mobile video.

Online video consumption is on the rise. Cisco recently predicted that 80% of all Internet traffic will be video by 2019[i]. Our use of mobile devices is clearly driving this change. Mobile video consumption has already surpassed 50%[ii] of all video consumption, making the mobile device the main video viewing platform globally. As Telstra’s OTT TV subsidiary, Ooyala, pointed out last December, “video viewing on mobile devices has become ubiquitous, commonplace, the norm; it makes up, literally, nearly half of all views worldwide.”  

Growth Drivers

There are four key drivers of mobile video adoption:

  1. Affordable Devices: High quality mobile devices such as smartphones and tablets, are widespread.
  2. Better Connectivity: High-bandwidth mobile network connectivity (4G), as well as private Wi-Fi and public hotspots, enable easy access.
  3. Platform Support: Social networks like Instagram and Facebook have made video content instantly watchable; broadcasters enable streaming of live events, accessible wherever the viewer is; and, OTT service providers support account access on multiple devices. 
  4. Available Content: From user-generated instructional YouTube videos and instant videos on Snapchat, video as a source of communication and information amongst consumers remains popular and continues to grow. Advertisers and traditional content producers such as broadcasters and TV studios, are also ensuring content is optimized for smaller screens.

Growth of mobile video.jpg

Consumer Trends: How are users consuming mobile video?

Millennials lead the market as the largest segment consuming mobile video and keen to share video content via social networks. However, mobile video consumption is a phenomenon that spans age groups. In 2015, the Interactive Advertising Bureau (IAB) conducted a global study of smartphone users in 24 countries and revealed that 68% share videos they watch on smartphones with nearly half using social media to find video content.

Users are also watching longer videos as smartphone screens improve. The most watched video content falls under the following genres:

  • Music and comedy clips
  • Movie trailers
  • How-to’ videos
  • Sport clips

This consumer behavior also opens new doors for mobile advertising, combining striking audio-visuals with targeted and personalized content. Indeed, in the IAB study, a majority of respondents said they were open to tailored advertising on mobile video. 

The IAB study also showed that mobile video consumption is coming mostly from mobile apps, accounting for 48%, compared to 18% on mobile websites. Recently, however, popular mobile browsers have enabled automatic video playing, following an earlier introduction of the functionality by Facebook. These moves are expected to increase in-video plays and use of mobile video in general.

Business models for mobile video

MNOs have adopted a variety of business models for mobile video. This is particularly evident in the USA, whereas many European operators still heavily rely on ‘fat’ data plans. A recent report from Huawei says European operators are lagging behind North American and Asian operators regarding mobile video solutions and business models.

Example mobile video offerings.jpg

Strategies for mobile video

Whatever their goals in media and entertainment, every MNO should have a holistic strategy for mobile video. MNOs that chose to monetize mobile video indirectly through data caps and overage will need to weigh-up the threat of video-centric offers from their competitors. Those that chose to court mobile video users with specific plans will need to be confident that the incremental revenues will offset the costs. Finally, the MNOs that decide to actively participate in content distribution will face the most complex task: acquiring content, deciding how to package it, and building an end-to-end delivery platform that meets the needs of consumers and rights holders.

Each path presents its own set of issues. In thinking through the optimal strategy, MNOs will need to consider:

  • What role do you want to occupy in the mobile video value chain? What share of value can be captured at what cost, and what are the pros and cons of different approaches?
  • How should you adjust your core services to align with mobile video consumer expectations and data demands? Are new approaches to pricing required, and how should they be introduced?
  • How well will your network cope with mobile video traffic demands? How much extra capacity is required and what can be done – either technically or commercially – to mitigate the impact? 
  • Where can you incorporate Wi-Fi connectivity to ease traffic on the macro network? How can in-home and out-of-home Wi-Fi boost your service offering?
  • What are the commercial, operational and technical barriers to becoming a content distributor? What content security measures are required to meet studio requirements?
  • Will advertising deliver a meaningful contribution to the business case?
  • How can mobile video benefit your wider service portfolio? What impact will it have on churn and retention and how can you utilize mobile video insights to better attract and serve your customers?
  • Do you have the optimal business set-up for your mobile video offer strategy? What partnering and/or acquisition opportunities should you consider? What do you need to build?

Mobile video consumption has grown quickly in the last few years and the impact cannot be ignored. Players across the telecoms, media, and technology industry are catching up, enabling, and/or monetizing on the mobile video opportunity. As a player in mobile video, where do you stand? 

 > Download our Autumn 2016 Coordinates for this article and more insights on the Media and Entertainment sector


Notes:

[i] Cisco VNI report, June 2016

[ii] ZenithOptiMedia, July 2016

 

In February 2017, we released our survey report, "The Future of Mobile Video", in collaboration with Mobile World Live, which provides anaylsis of current and future trends of smartphone video consumption. < Click here > to download the report.