The online video distribution business model faces increasing challenges, particularly as explosive traffic growth is driving some costs faster than revenues. This is unsustainable – and there are many other changes: in content creation, aggregation, and distribution; in devices; and in end-user behaviour.
The Online Video Value Chain
This new Briefing summarises the evolution of the key technologies, the shifting industry structures, business models and behaviours, the evolving scenarios and the strategies required to prosper.
Telco: Group strategy director, business development and strategy teams, data and IPTV product managers, CIO, CTO, CMO; Media companies; Broadcasters; Content players.
In theory, telecom operators should be well-poised to benefit from the evolution of video technology. Fixed and mobile broadband services are increasing in speed, while phones and set-top boxes are becoming much more sophisticated and user-friendly.
Yet apart from some patchy adoption of IPTV as part of broadband triple-play in markets like Japan and France, the agenda is being set by Internet specialists like Google/YouTube and Joost, or offshoots of traditional media players like the BBC’s iPlayer and Hulu.
Many consumers are also turning to self-copied and pirated video content found on streaming or P2P sites. And although there is a lot of noise about the creativity of user-generated video and mashups, it is not being matched by revenue, especially from advertisers.
These changes present commercial challenges to different players in the value chain. Changes in user demand challenge the economics of “all you can eat” data plans (see "iPlayer nukes ISP business model"), content creators face well known issues relating to digital piracy and content protection, while aggregators face challenges monetising content.
Our new research uses scenario planning to map out and analyse the future. The methodology was designed to deal with many moving parts, uncertain times and rapid change. We identified three archetypal future scenarios:
Which of these scenarios will dominate, when, and what can operators and other players do in order to prosper?
Key questions for online video distribution
Emerging industry structure
Future challenges for the industry
Future scenarios for online video
Strategic options for distributors