US LESSONS LEARNED: OTT, DATA USAGE GROWTH & MONETIZATION RESULTS

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INTRODUCTION

In the United States, demand for over-the-top (OTT) video is at an all-time high with no signs of slowing down. In a culture that values and expects the delivery of massive amounts of content at anytime, anywhere and on any device, the demand for OTT content will continue to expand for the foreseeable future. In fact, industry experts predict that OTT video will and ultimately become a mainstream method for viewing video content. The “TV Anywhere” dynamic is a current expectation regardless of age or geography.

For example, in a recent study conducted by MTM, an independent London-based research and strategy group, domestic (US) premium OTT revenues are expected to grow from $4bn in 2014 to between $8-12bn in 2018. Niche services, complementing more generalist pay-tv or OTT offerings, are also expected to proliferate with up to 15-20 new specialist OTT providers acquiring 100,000 or more paying subscribers by 2018, with even more attracting smaller number of subscribers.

 

Over the Top Meets 4K

As OTT video consumption ramps up, consumer behavior and technology will continue to expand and evolve accordingly. In order to keep pace with and more importantly, optimize the ever-expanding OTT universe, the industry must anticipate market changes, overcome the technical challenges and create flexible business models that monetize new opportunities that assure both a quality experience for the subscriber and profitability for the operator.

As expected, the emergence of OTT in Europe is following a similar path to the US experience and despite regulatory issues and technology challenges, the European OTT market is also expected to grow
exponentially and present great business opportunities over the course of the next few years in particular.

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However, in order for Europe to experience the same success as the US OTT market, it is critical to understand subscribers’ high-speed data usage behaviors. As evidenced in the US, a granular understanding will allow providers to make optimal business decisions about their future broadband offerings.

 

THE US EXPERIENCE

According to the MTM study, the US premium OTT market has seen strong growth over the past years, largely driven by Netflix, YouTube, Amazon and Hulu. In 2014, the market was worth $4bn, having grown at a CAGR of 36% between 2011 and 2014. By the close of 2014, 40.3% of US TV households were subscribing to at least one premium OTT service. However, SVOD revenues, around $4bn, comprised only a relatively small share of the wider TV and video market estimated at approximately $185bn in 2014.

ov-data-usage3aThe rapid growth of premium OTT services in the US market has been due to a number of factors, including wide availability of broadband infrastructure; consumer demand and willingness to pay for content; scale and wealth of the US market; the fact that the US is a leader in media, entertainment and technology; and Netflix’s domestic success, which stimulates overall interest and investment in the OTT market.

ov-data-usage-4Successful operators, programmers, service providers and broadcasters in the United States who recognize the revenue potential of these market changes and OTT growth have adjusted their business models accordingly. However, in order to monetize these new opportunities, several factors must first be addressed in order to ensure this transformative success. To begin, consumer’s new viewing habits and high-speed data demands present not only technical issues such as network congestion but also pricing/budget challenges and customer satisfaction concerns. Therefore, many Independent broadband providers have begun offering cost-effective solutions that respond to consumers’ evolving streaming behaviors, offer friendly data usage plans and flexible pricing models and yet do not require large capital investment into the network infrastructure.

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OPENVAULT’S LARRY FOLAND ELECTED TO CCTA BOARD

OpenVault is proud to announce that Larry Foland, OV’s Vice President of Sales and Business Development – North America & Caribbean, has been elected to the Board of Directors for the Caribbean Cable Telecommunications Association as an Associate Director. As a leader in the telecommunications industry for more than 20 years in both vendor and provider roles, Larry also serves as co-chair on the board of the Mid-America Cable Telecommunications Association and is an active member in many other professional associations and trade events.

In this new role as Associate Director at CCTA, Foland will collaborate with his peers to regulate new industry standards and practices while also design innovative strategies to elevate the market environment for cable and telecommunications providers throughout the Caribbean.

Formed in 1983, the Caribbean Cable and Telecommunications Association represents cable and telecommunications providers throughout the Caribbean, as well as the programmers, software and hardware suppliers that support their operations.

NFL Game Changer for Live Streaming Market

OV Lt Grey Google 320 132 2NFL insiders recently predicted that a partnership between the National Football League and an online streaming provider is the future of football viewership. In fact, in an interview with NBC Sports, Arizona Cardinals president Michael Bidwell said, “There’s no doubt it’s coming. The question is how we transition into it. What we need to do is do a great job of listening to our fans about how they want to consume NFL content. Our fans are switching to digital, they’re switching to handheld and mobile devices, and we want to respond to that.”

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Top Two Ways to Drive Incremental Revenue

OV Lt Grey Google 320 132 2In today’s global data explosion, scientists have concluded that more data has been generated in the past two years than in the entire history of mankind. Staggering data growth trends indicate that big data technology and the associated services market will grow at a near 27 percent compound annual growth rate to $41.5 billion over the next two years. Of course, one of the major sources of this massive growth is Internet of Things devices, which is projected to reach conservatively speaking, 50 billion by 2020. Simply stated, data growth, especially in video over the Internet, is bigger than big.

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Case Study: Effects of Metered Billing on HSD Subscriber Growth

Today’s increasing trend of “big data growth” does not show any signs of slowing down. In fact, with live streaming on an accelerating rise, and the amount of data being produced to the way in which it’s structured and used, this growth is expanding at unprecedented rates. And although this trend may present some challenges, it also offers tremendous business opportunities. To this end, many broadband providers who recognize that monetizing the data traffic growth is necessary and inevitable, have moved to usage-based, or metered, billing strategies for their High Speed Data (HSD) products.

However, other providers still sit on the sidelines hesitant to make a change and fearful of the potential for negative consequences of metered billing, including slowing subscriber growth. Therefore, this Case Study looks at the effects of metered billing on HSD subscriber growth.

 

Case Study 1

 

Case Study 2

 

The 12-month chart above also indicates that subscriber growth resumes in the months following the launch of metered billing. The 2 charts below take a look at the 5 month growth trend prior to launch and the 5 month growth trend starting in the 3rd month post launch.

case study 3

case study 4