Mobile Video: There’s Money, Honey
Telcos and OTTs are both wooing customers with mobile videos. Who kisses first is the question.
Whether it’s bingeing on stranger things, cute pets or epic fails - people just can’t get enough of video on their mobiles. By every metric we’ve seen, which includes live operator usage data, mobile video is the killer app. People aren’t just checking out video clips to fill a few spare minutes here and there. Marketing professionals will tell you that there is serious ROI associated with telling their messages with video - 60 per cent of them agree that if people can choose between text and video for the same message, they choose video.
It is not just short-form video that is transforming the way we use our mobiles. As mobile devices get more
sophisticated and mobile speeds get faster, for the Netflix generation, mobile phones are increasingly an HD extension of the viewing experience they’re used to at home. Thanks to faster networks and higher quality screens, they can binge watch the latest blockbuster series…almost anywhere, it seems. So much so that nearly 40 per cent of mobile video traffic is now HD. This finding is from Openwave Mobility’s Mobile Video Index research of live data from more than 30 operators around the globe from 2013 to 2017. The growth in HD traffic has far exceeded operator predictions.
The mobile video mega-trend is leaving operators between a rock and a hard place.
The customer is always right, right?
Firstly, this trend is coming from the subscriber. They – we – can’t get enough of video! It reflects the popularity of watching OTT streaming video services like YouTube or Netflix. Today over 820 million people across the world watch YouTube and Netflix on mobile devices. This trend reflects the popularity of platforms like Twitter, Facebook and Snapchat who use video to maximum effect. And, the number one rule of business is to give the customer what they want. Video it is.
Buffering is bad business
Another rule: don’t make the customer wait! The consequences of buffering are dire. If subscribers encounter buffering or poor quality video, they turn off. Our research found that all it takes is six seconds of buffering. And what’s more, poor QoE when it comes to mobile videos is their number one frustration. Whereas just a few years ago, dropped calls were subscribers’ pet peeve. Videos that don’t load or buffer really frustrate subscribers. Poor QoE leads to churn, every mobile operator’s worst nightmare.
Working in the dark
The obvious thing to address the challenge of QoE would be to manage traffic flow in such a way as to optimize video, and of course, that is what operators are trying hard to do. The problem comes from the next major finding in our Mobile Video Index report. Three quarters of all mobile traffic is now encrypted. Encryption protocols prevent operators from being able to profile or optimize data with conventional traffic management tools. Thanks to UDP-based encryption, Google’s QUIC and Facebook’s 0-RTT, Openwave Mobility predicts that by November 2018, approximately 90 percent of mobile internet traffic will be encrypted.
Put simply, how can operators manage what they can’t see?
If video is the killer app, who’s the winner?
It’s no secret that OTT players have eaten into operator revenues. In 3 years OTTs wiped out voice revenues. In 2.5 years they wiped out messaging revenues. Is mobile data next? You bet.
The challenge mobile operators are left with is two-fold. One, they must find a way to reclaim their subscribers, to “monetize” them once again. Two, as increasing encryption obscures their view of their own networks, mobile operators need to rethink how they can deliver HD- quality (and beyond) to subscribers.
As they say, change is the only constant, and HD is just today’s challenge. Looking ahead for what is in store for operators, Dimitris Mavrakis, research director at ABI Research, commented, “If AR/VR, 3600 video, tactile internet applications and new use cases achieve commercial success and come to the mass market in the next few years - current usage estimates will be blown out of the water.”
JOHN GIERE, President & CEO, Openwave Mobility