Consumers are gravitating to an ever expanding array of OTT services – much to the chagrin of telecom operators. Andreas Bernström, CEO of Rebtel, argues that not partnering up means missing out on big revenues and the control of their market.
A data plan to charge consumers extra for Skype, Google Talk or other VoIP calls has been squashed by TeliaSonera; sort of. Instead of the planned 6 Euro fee for 5 to 10 hours of VoIP calls, the operator is simply raising rates for all.
MetroPCS became the first US carrier to take the leap to voice-over-LTE, combining its voice, messaging and Internet services onto a single IP network. Verizon, AT&T, Sprint and T-Mobile have VoLTE plans of their own but they don’t necessarily have the same motivations for getting there.
Rebtel, which calls itself the biggest mobile VoIP company after Skype, is expanding its emphasis on mobile with the launch of its first iPad app. The company is looking to ride the growth of tablets and get even more people on to its cost calling service.
“Operators treat partners like vendors.” That quote comes form Google director of global android partnerships John Lagerling, who said it at a Dublin conference where it was captured by Light Reading. It’s a telling statement — one that sums up a big problem facing the wireless industry.
Your Facebook or LinkedIn account doesn’t have a phone number, but one day it might if Tyntec has anything to say about it. The German company wants to build a virtual mobile phone into any Web 2.0 service, bridging the gap between over-the-top apps and mobile.
At MWC executives of two prominent operators said the industry has significant challenges in the form of over the top providers commoditizing their revenue streams without those companies putting any significant investment of their own into the network. Here’s what operators should do.
With the rollout of its massive Xbox Live update, Microsoft has made a strong bid for the pole position in the digital living room. And with dozens of new programming partners also included with the update, the company now offers perhaps the most comprehensive, versatile and advanced over-the-top video system of any major player, including Apple and Google. But the most intriguing additions to the platform are not, strictly speaking, over-the-top offerings. Rather, they point to a possible future for pay-TV services that could be far more disruptive to the existing economic model.
Television commercials may soon start going over the top. For anyone looking to break pay-TV providers’ current stranglehold on the business, that’s a good thing.
Last week Adobe acquired online video ad management company Auditude for a reported $100 million. The deal will enable Adobe to integrate ad-serving capability into the Flash video-streaming platform used by many over-the-top video providers to reach connected TVs and set-top boxes.
“With this acquisition, Adobe can now offer an unparalleled platform for authoring, distributing, analyzing and monetizing digital video experiences everywhere — simplifying workflows, increasing consumer engagement, delivering insights and driving increased revenue for content publishers,” Adobe senior VP of digital media David Wadhwani said in a press release.
Also last week, LG Electronics signed a multiyear agreement with ad-services provider YuMe to bring video ads directly to LG’s connected TVs via the LG app store. Toyota has signed on as the first sponsor under the new deal, using LG TVs to promote the 2012 Camry.
The sponsorship is “a great opportunity to learn more about the connected-TV space,” national marketing media manager Dionne Covin told the New York Times. “[It will] build on the knowledge we’ve already gained” through earlier tests.
Plenty of OTT video carries ads already, of course. Most Hulu and professional YouTube content is ad-supported, as is most content streamed directly from programmers’ own websites. But those are designed largely to protect existing relationships among advertisers, programmers and distributors, not to disrupt them. As often as not, online ad time in network shows is sold as a package with broadcast or cable time.
Though they’re still baby steps, the LG and Adobe deals point to the evolution of IP delivery platforms themselves into a channel that marketers could use to reach consumers in their living rooms without needing to pay the high advertising CPMs that traditional broadcast and cable networks command. The shift could someday provide a critical new revenue stream for would-be new entrants looking to break up the pay-TV bundle and offer consumers new à la carte options.
The TV business rests on two pillars: the subscription fees pay-TV providers collect from consumers, a goodly portion of which get remitted to programmers via carriage and retransmission fees; and advertising. Any over-the-top video provider hoping to disrupt the current business will need access to at least one of those two revenue streams. Of the two, advertising is the most promising.
The current subscription revenue stream remains tightly bound to the incumbent service providers, making it difficult for new entrants to grasp. Some OTT services like Netflix, Hulu Plus and MLB.com have managed to establish their own subscription relationships with viewers, but those services have positioned themselves largely as supplemental to the viewer’s existing pay-TV service rather than as a substitute for it.
The advertising revenue stream is less platform-dependent, however, and thus more ripe for poaching, which is what makes the Adobe and LG deals (and Roku’s earlier deal with mDialog) potentially significant.
If IP video platforms develop an efficient and effective infrastructure for serving targeted ads directly to viewers, independent of any particular program or programmer, it would give OTT service providers the monetization engine they need to compete for high-value content deals.
As marketers seek out the growing pool of digital viewers, moreover, advertising dollars might begin to shift from traditional programming channels to the newer channels. Over time, that would further weaken ties between programmers and traditional pay-TV service providers by making distribution on new digital platforms more commercially viable and attractive.
None of that will happen overnight, of course. The Adobe, LG and Roku deals are just starting points. But if OTT services are ever to compete with pay-TV providers for the affections of programmers, they will need their own revenue stream.
Question of the week
Sonic.net could soon be one of the first ISPs to introduce a TV service delivered over its broadband service. With the filing of a video franchise application with California’s Public Utilities Commission, Sonic is on its way to creating its own streaming video service.