Senior Consultant, DigiWorld IDATE
SDN and NFV, Cloud computing, OSS/BSS are leading priorities for telcos
IDATE publishes a market report on the network technologies deployed by telcos to tackle the current technical and economic stakes. The report explores how the technologies answers telcos’ needs while analyzing their impact on the industry ecosystem.
Face to the high consumers’ expectations in terms of experience, the transformation of network architecture remains at the heart of telecom operators’ priority. Indeed, network infrastructures are being assailed by the new constraints of applications, and by users’ demands for higher bandwidth and better quality. In the very competitive market and in order to save costs, telcos are working to optimize their investments in infrastructure while generating new revenue streams. Thus, optimization technologies in the network architecture have been taken into account with the integration of traffic and policy management, video optimization and OSS/BSS in the current telecom network infrastructure with the main upcoming disruptive technologies: cloud computing, SDN (Software-Defined Networking) and NFV (Network Functions Virtualization).
Indeed, there is a clear priority for the implementation of cloud computing in telcos’ network making it cloudified, virtualized and software-based networks. Preparing the transition with SDN and NFV is considered as a key part of major telcos’ global strategy detailed in Telefónica’s UNICA and in AT&T’s Domain 2.0 programs.
• Cloud computing equipment market will hit 45 billion EUR by 2019
• SDN and NFV equipment market will experience an annual growth rate of 53% per year between 2015 and 2019 and is seen as the most dynamic market among the network optimization technologies studied in the report.
These disruptions generate substantial changes in the network industry, with an acceleration of the convergence between IT and telecoms as telcos increasingly implement technologies under the form of software and applications shaking up the ecosystem. Core businesses of traditional equipment makers are particularly affected due to the value shift currently happening in the telco sector. Equipment suppliers need to redefine their strategies and to position themselves around the cloud, software and services while new suppliers from IT have been introduced in the carrier infrastructure ecosystem.
In the report, IDATE provides a database with forecasts of network optimisation technologies up to 2019 covering 3 regions – North America, Europe and Asia Pacific – and global consolidated. Overall, for each of these regions, 7 segments are forecasted - traffic and policy management, Telco Wi-Fi, Mobile backhaul, Video infrastructure, SDN/NFV, cloud computing and OSS/BSS.
Also included in the package, status of the art of each network optimization technologies market as well as telecom equipment makers’ strategies for 5 players including Cisco, Ericsson, Alcatel-Lucent, Huawei, NSN and strategies of major telecom operators for 7 players including AT&T, DT, Orange, Telecom Italia, Telefonica; Verizon and Vodafone.
Find out more in our dedicated market report
To be published in Communications & Strategies n°99 – See previous issues here
Fabien CURTO MILLET
Director of Economics, Google
Interview conducted by Yves GASSOT,
CEO IDATE DigiWorld
C&S: Is the SMP regulatory framework fit for purpose given the competition among telecom providers and between telecom operators and online service providers?
Fabien CURTO MILLET: Actually, platforms are not an Internet phenomenon. A platform is simply an environment where two or more groups of economic agents come together to transact in some manner, so the concept is extremely generic: an example of a platform commonly used in the economics literature is that of singles bars! There are many economically important platforms outside tech. You can think of a free-to-air television channel as a platform, bringing together viewers and advertisers; the same goes for newspapers. And within tech, there are many platforms that historically had nothing to do with the web. An operating system can be analyzed as a platform, bringing together application developers and users. So the concept has wide applicability.
It is true, however, that the latest crop of web-era platforms has attracted a great deal of public attention. I attribute that in large part to the simplicity of use and degree of innovation of many of these businesses, which revolutionize everyday tasks and disrupt existing approaches. Obvious examples include apps like Uber, BlaBlaCar and Lyft in transportation, or AirBnB for accommodation.
Google operates several platforms, starting with its search engine and Google market . Are there any others you can think of?
Many of Google’s activities involve the creation and/or operation of various platforms. In the ads space, we have for many years run AdSense, an ad network bringing together users and advertisers on third party websites, while allowing publishers to monetize their content. Similarly, YouTube brings together content creators, viewers and advertisers.
Academic works on platform economics invariably come down either to works on multi-sided markets that emphasise the role of an intermediary between multiple parties that platforms play, or analyses of platforms as strategic necessities for capturing innovations created by others. Do you think that is a fair assessment?
Much of the literature is indeed concerned with analyzing the role of platforms as a matchmaking device between their various types of participants. This is not surprising, as the art of a platform operator is precisely to figure out how best to balance the interests of parties on various sides. In the context of web search for example, this often involves search being provided to users for free, but with advertisers on the other side being charged (usually when their ads are clicked on by users, under the so-called Cost Per Click pricing model). This is the case of search services like Google or Bing (which have clearly demarcated spaces for ads) for example; the point also applies to more specialized players like Booking.com or Tripadvisor.
But the literature is vast and touches on many interesting topics. An example is the technical question of how to carry out market definition in a platform context. One issue there is that the standard market definition test normally looks at whether customers switch away in response to a given percentage price rise. But in the context of platforms, the price charged to one side is often zero. In this case, how should the test be adjusted in practice?
These are only examples, and while the literature is already vast it is also evolving, so I think we can look forward to additional insights in this area.
How do you explain the fact that the GAFA quartet (i.e. Google, Apple, Facebook and Amazon) is much less powerful in certain markets – notably Russia, China and even Japan and South Korea?
These four companies have obviously achieved great success in many areas, and are engaged in formidable competition across multiple products and services. Spaces where some or all of these firms compete include search, cloud computing, social networking, operating systems, advertising, mobile phones and tablets. If you take cloud computing, for example, there is currently a great battle between Amazon, Google, Microsoft and other firms like SAP and Rackspace, with many massive rounds of price cuts and quality improvements having characterized the space in recent years. So it is very difficult to give you an overall answer covering such a broad scope of activities!
Since you mention specific countries, it is interesting to note that they have also developed a number of strong competitors in a range of tech areas. To take search, for example, we have Russia’s Yandex, South Korea’s Naver and China’s Baidu. But it would be unfair to label these as local players, since they are also engaged in aggressive plans to expand internationally -- Baidu is developing in Brazil, while Yandex is already present in several countries and has recently expanded by serving searches in Turkey. As for the success of the “quartet” in the countries you highlight, it really depends what you are looking at. Just take the most recent earnings release from Apple -- they reported revenue growth of 112% in “Greater China” (mainland China, Hong Kong, and Taiwan) and iPhone unit growth of 87% in that area.
Some see the eruption of new players in vertical industries – prime examples being Uber in transportation or Airbnb in the tourism business – as the emergence of new platforms and new sources of competition for the Internet’s leading horizontal platforms? Do you share that point of view?
The digital economy is rife with entry and innovation. The two examples you mention are a case in point. Another notable story is that of Snapchat, a mobile-only video and photo sharing service that came from nowhere, and into an already quite busy space. But it became wildly popular at breakneck speed. Snapchat users today share over 700 million photos worldwide per day, which is reportedly larger than the combined volume of Facebook and Instagram -- truly remarkable for a service that did not exist five years ago and that is only available on mobile! So I absolutely agree that these new entrants have further turned up the competitive heat on existing firms, including Google. If you’re looking for a rental property for your next holiday in Provence, you might perhaps go directly to the AirBnB website or app, instead of running a search on Google or Tripadvisor.
This broad phenomenon in itself is not particularly new for the digital economy -- for many years, companies with a more specialized focus have been competing with firms having broader business models, like Google. Google aims to answer any question that a user might have, whereas players like Tripadvisor focus more narrowly on particular content categories (especially the more commercial queries). Another case in point is Amazon, which is of course a very major competitor in shopping queries. Already in 2012, a Forrester study found that some 30% of online shoppers in the US started researching their latest purchase on Amazon, versus 13% on search engines.
Many fundamental factors drive these competitive developments. First, barriers to entry into many digital activities are generally low and dropping fast. One reason for this is the development of cloud computing: it used to be the case that firms needed to invest in their own server infrastructure in order to procure computing power, therefore incurring fixed costs. Cloud computing does away with that, by turning this fixed cost into a variable cost – and a low one at that, given the competition I mentioned earlier in this area. This is precisely one of the ingredients behind Snapchat’s success, as they run entirely on the Google cloud. Second, switching costs are pretty low – it is generally trivially easy and inexpensive for users to try out a new app or website. We often say at Google that “competition is just one click away” – although we should perhaps modify that line for the mobile era and say that it is “one tap away”: according to comScore, almost 90% of mobile Internet time in the US is spent on apps rather than in the browser – truly a revolution. Such ease of access to competing services means that we observe extremely high levels of “multi-homing”, i.e. the presence of a user on multiple competing platforms at the same time (e.g. Twitter and Facebook). I think these fundamental forces are here to stay, so we should have the opportunity to observe many more examples of disruptive entry in the future.
Net neutrality debates have resulted in regulations that limit the risks of ISPs discriminating against certain kinds of content. How do you respond to those who want to see these neutrality obligations extended to platforms? For instance in the choice of applications that app stores host, or the neutrality of algorithms?
Things like the choice of applications hosted or the operation of algorithms go to the very heart of what a platform does. “Neutrality” is a nice-sounding word, but it’s essentially in the eye of the beholder. The purpose of an algorithm is precisely to rank things from more to less relevant. Who is to say that one choice is better than another? And on what criteria? Is it neutral to rank restaurants by reference to distance to the user, or should we use review counts instead? Or maybe both? And how should one compare restaurant results and web page results? You very quickly get into rather abstract and arcane debates as to whether a particular approach is really treating like-with-like and so on.
Fortunately I believe these are questions which do not need resolving. Most economists would agree that regulatory intervention is only appropriate in circumstances where competition fails as a disciplining force. And there is frankly very little indication of problems across the digital economy. In addition to the rapid entry I discussed in my previous answer, I think any objective observer would agree that the speed of innovation in the digital economy is extremely high. This is for me a fundamental indicator of the competitive health of a sector – it ought to act a bit like a thermometer to determine whether a patient is sick and guide enforcement. After all, as the famous English economist and Nobel laureate John Hicks once observed: “The best of all monopoly profits is a quiet life”. There is preciously little that seems quiet about the digital economy today.
What differences do you see in the exchange of ideas taking place in Europe and the United States over platforms and the inherent risks of dominant positions?
I think that the exchange is a lot more nuanced in both places than it is often portrayed. From a Google perspective, we have faced antitrust scrutiny on both sides of the Atlantic -- the Federal Trade Commission in the US thoroughly investigated many parts of our business in great depth (notably touching on search, patents and ad campaign portability), leading to voluntary commitments in some areas in January 2013. In Europe, we are obviously currently working with the European Commission today in the context of its own ongoing antitrust investigation.
And while many commentators would like to cast current events in terms of various arm wrestling matches between European regulators and American tech companies, this unduly simplifies reality. For example, Germany’s Monopolkommission (Monopolies Commission) recently concluded a wide-ranging investigation into competition in digital markets. In the context of search platforms, this independent agency noted that “search engines’ low degree of user lock-in in comparison with other platform services (e.g. social networks), and the low degree of advertiser lock-in caused by network effects means that the search platform’s attractiveness from a user perspective is of key competitive importance, and this explains why even search engines with high market shares have an interest to further develop their offering with their users in mind, in order to secure their market position going forward”. Moreover, they expressed a clear view with regard to intervention: “The Monopolies Commission takes the view that a purely preventive regulation – irrespective of potential abuses – is not currently warranted. This holds true in particular for a regulation of search algorithms or regulatory unbundling instruments”.
Finally, I would take issue with the idea that there is an “inherent” risk to the emergence of dominant positions. I am sure that companies like MySpace or the now-defunct Friendster have views on the question, given how at one point they both towered over the social networking space. And I am always greatly amused by old press cuttings calling winners in one area or the other -- for example, Fortune declared in a 1998 article that “This much is clear: Yahoo! has won the search-engine wars and is poised for much bigger things”. 1998 was of course also the year when Google was founded... If there is anything certain in the digital economy, it’s that competition often comes from where you least expect it and failure to innovate faster than your competitors is the real “inherent risk.”
Fabien CURTO MILLET is Director of Economics at Google, where he has worked since 2011. He reports to and works closely with Chief Economist Hal Varian on the development of data-driven insights and on research to evaluate the economic value of Google and the Internet. He also leads economic analysis in all competition and regulatory processes involving Google at a global level. Fabien was previously a Senior Consultant in the European Competition Policy Practice of NERA Economic Consulting, where we worked from 2004. During that time, he advised in major European merger control processes such as ABF/GBI, Thomson/Reuters and Universal/BMG. His experience spans a wide variety of business sectors, including: airports, financial services, mining, music publishing, pay TV, print media, retailing, and satellite communications. Fabien was educated at Oxford University, where he obtained a BA in Economics and Management, an MPhil in Economics, and a Doctorate in Economics. For two years he was a Lecturer in Economics at Balliol College, Oxford. He further obtained a Postgraduate Diploma in EC Competition Law from King’s College, London.
The Communications & Strategies No. 99 "The Economics of Platform Markets - Competition or Regulation?" will be soon available!
More informations about IDATE's expertise and events :
Directeur Général, IDATE DigiWorld
Pas vraiment de trêve pour l’actualité dans nos secteurs cet été. Nous retiendrons notamment les évènements suivants...
L’Europe des télécoms : poursuite de la consolidation et premiers signe de rétablissement
En Europe, après les annonces de la fusion de O2 (Telefonica) et Three(Hutchison) au Royaume-Uni et de Wind (Vimpelcom) et 3 Italia (Huchison) en Italie, les marchés mobiles continuent de se replier sur une configuration à trois opérateurs (cf. la carte ci-dessous et l’analyse de notre expert, Didier Pouillot).
Les opérations de fusion dans le secteur sont cependant regardées avec beaucoup d’attention par la Commission Européenne qui n’hésite pas à imposer des contreparties sévères, comme on l’a vu en Espagne pour l’autorisation finale - huit mois après le début de l’enquête - de l’acquisition de Jazztel (présent essentiellement sur le fixe) par Orange. De son côté l’OFCOM engage une vaste revue des marchés avec comme point de passage obligé l’évolution ou non du statut d’Open Reach, la branche accès fixe de BT. Quant à l’opération de répartition des actifs ou de rapprochement entre Vodafone et Liberty Global, rien ne permet de croire qu’elle serait imminente.
Sur le plan des performances du secteur des télécommunications en Europe, les résultats des deux premiers trimestres soulignent que l’on n’est qu’au début d’un rétablissement avec des revenus toujours en baisse sur la quasi-totalité des marchés même si l’on observe une tendance à l’amélioration des marges.
Dans le domaine de l’Internet et des GAFA, les réfutations par Google (qui crée la holding Alphabet) des arguments de l’enquête de la Commission Européenne laissent présager une procédure particulièrement longue. On aura aussi beaucoup parlé d’Uber et de Airbnb durant cet été. Mais finalement, ce sont des leaders de l’industrie traditionnelle (Audi, BMW et Mercedes) qui vont acquérir Here de Nokia. Plus généralement, le débat sur les positions dominantes des « plateformes » sur certains marchés, pose de redoutables problèmes. Ce sera d’ailleurs l’un des thèmes forts du DigiWorld Summit des 17-19 Novembre 2015. Je vous invite aussi à lire le passionnant numéro de notre revue Communications & Strategies consacré à l’économie des plates-formes qui vient de sortir.
Etats-Unis : la course aux Gigabits
Aux Etats-Unis, de nombreux commentaires se sont employés à analyser les facteurs qui ont conduit AT&T à prendre le contrôle du deuxième acteur US de la TV payante, DirecTV (cf. notre propre analyse). Dans le même temps, la course aux Gigabits (ou aux annonces de réseaux à plus de 1 Gigabit) se poursuit avec notamment le début de certification de la nouvelle génération de câble-modem Docsis 3.1. (saluons à cet égard l’acquisition par Technicolor de la branche CPE de Cisco héritée de Scientific Atlanta).
Ces interrogations sur la pertinence de la nouvelle frontière que constituent les accès Gigabits donneront lieu à un forum dédié dans le cadre de notre DigiWorld Summit le 18 Novembre 2015. Dans le mobile, on retiendra que sans surprise T-Mobile US est passé devant Sprint en nombre de clients. Globalement si les marges résistent et sont plus confortables qu’en Europe, le marché US des mobiles semble s’installer dans un régime de baisse des revenus.
Chine : entre accélération et premiers signes de saturation
En Chine, on retient à la fois la capacité spectaculaire du marché mobile à se redéployer rapidement sur la 4G - à commencer par China Mobile qui a conquis… 100 millions d’abonnés LTE en 6 mois ! - et le premier trimestre de déclin des ventes de smartphones (la Chine représentant 30% du marché mondial). Là aussi, je fais référence au prochain DigiWorld Summit, puisque la Chine est l’invité de l’édition 2015 de la conférence internationale de l’IDATE.
Microsoft : acteur clé de la transformation digitale… et de sa propre transformation
Enfin, on mentionnera le lancement de la nouvelle version de Windows (« Windows 10 »), capital à plus d’un titre pour Microsoft, puisqu’il s’agit de succéder à Windows 8, version précédente et décevante de son OS, de constituer un point d’appui pour regagner en crédibilité sur les mobiles (grâce à la capacité d’attirer les usagers comme les développeurs par un environnement unique sur PC, tablettes et smartphones) et d’ancrer une nouvelle stratégie du groupe clairement orientée sur les logiciels applicatifs et le cloud. A un moment où l’on ne parle que de la transformation numérique des secteurs et des entreprises, la mutation amorcée par le nouveau président de Microsoft pour remettre le roi du PC au centre de l’innovation numérique va être passionnante à suivre…
Senior Consultant, IDATE
Internet is becoming not-so-free
Internet Giants are increasingly finding themselves under scrutiny for unfair competition and tax issues – what was once regarded as a free OTT ecosystem is now facing regulatory challenges. Internationally operating players working in various domains and geographical locations are complicating this regulatory challenge, with different cultures and market conditions requiring different approaches.
While this past decade has seen a completely new economy evolve based on the Internet and OTT players (remember, Google’s IPO was only just over 10 years ago), new challenges have also been created by this phenomenon, one of which is regulation. Until recently, new Internet services and business models were being actively encouraged, with the aim of helping to galvanize the economy; however, there is now simply too much revenue involved and more regulatory intervention is becoming inevitable.
Major OTTs diversifying into various service domains
Source : IDATE, The Future Internet in 2025, July 2015
The domains in which regulation on OTTs is currently gathering the most urgent attention are the fields of taxation and fair competition, the regulatory needs being brought about by the sharp rise of leading sharing economy players such as Airbnb (accommodation rental platform) and Uber (car sharing application), where users can offer a spare room (Airbnb) or a car ride (Uber) between end users as opposed to using standard (more expensive) channels such as hotels and taxis. Such players are not required to work under the same rules as those of their traditional counterparts; licenses are not needed, insurances are not taken care of and rigorous safety concerns are not necessarily required. Further, tax issues are often overlooked, with many sharing economy participants not even aware that there is tax involved; they simply do not have the mindset that they are participating in a revenue-generating business, but are simply “earning a few bucks” in a relatively hassle-free manner. This then leads to an unfair playing field, giving the OTTs an unfair advantage over their traditional counterparts.
The regulatory response to these players currently varies from one country to another, or even from state to state in the larger countries.
• Citing the unfair competition landscape, Uber has been banned outright in Spain, whereas in Italy the application is allowed and the noise coming from the Italian government appears to be supportive of Uber, considering modifications to their regulation to make it easier for them. These are exceptions to the rule, however, with most governments placing an intermediate ruling whereby Uber is allowed but only for licensed drivers.
• Tax collection remains a hot topic, especially for Airbnb where local transient occupancy taxes (“hotel taxes”) are compulsory for all listings yet collection remains difficult. While initially Airbnb stressed that they were not responsible for the collection of the taxes, their stance has softened recently and since the latter part of 2014 they have started to automatically collect and remit the hotel tax in some areas, such as San Francisco and Amsterdam. It is understood that they are continuing negotiations with various other cities also.
It should be noted that while it is these startups that are causing the OTT regulation debate of tomorrow, the large Internet giants and in particular Google are also under scrutiny for unfair competition and tax issues. However these issues have been under investigation for a number of years and are evolving, albeit slowly, with occasional developments from time to time. The same can be said for regulatory debates on the likes of net neutrality, data protection and intellectual property (copyright) issues.
Europe is still debating over which approach to adopt
Such developments in the debates often come from the same countries, with the likes of the US, France, Germany, Spain and the Netherlands often ahead of the rest when proposing and/or enforcing OTT regulation. In addition to what has been mentioned above, net neutrality has continued to make headlines. While Europe is still debating over which approach to adopt, the United States has recently made a bold move by reclassifying broadband as a telecommunications service, thereby paving the way for strict net neutrality regulation. In Europe there are moves by the European Union as a whole, such as the proposed reform of the data protection directive, but some countries stand out more than others. The Netherlands, for example, were the pioneers of net neutrality deployment and the first country to introduce an “Airbnb law”, legalizing the business in exchange for tax payments. Germany has been strict on Uber, at one point banning the service as in Spain, although this motion has been overturned (for now), while both Germany and Spain have ruled that Google are required to pay for information published on Google News. France has strong legal frameworks on many OTT related domains, and is also at the forefront of debates concerning sharing economy players.
Find out more on Net Neutrality and key stakes for tax optimization, privacy, copyrights and other topical issues surrounding OTT regulation in our dedicated market report
Responsable de la practice Digital Home & Entertainment
"En 2015, plus de 70% des revenues du logiciel de jeux vidéo sont issus de la vente et de la distribution dématérialisé, contre 22% en 2008."
La dématérialisation, levier de désintermédiation et de croissance du secteur des jeux vidéo
Le marché mondial du logiciel de jeux vidéo est passé de 35.3 milliards EUR en 2008 à 47.7 milliards EUR en 2014, sous l’impulsion de sa dématérialisation, de l’apparition de nouveaux segments ou de la confirmation du succès de segments récents. La dématérialisation a permis d’adresser un public de plus en plus important, sur toute plateforme dotée d’un écran, fixe ou mobile, et avec des contenus de plus en plus variés. En 2014, 69% des revenus du logiciel de jeux vidéo étaient issus de la vente et de la distribution dématérialisée, contre 22% en 2008. Les revenus issus de la dématérialisation ont connu une croissance annuelle moyenne de 26.8% sur la période, contre 9.7% pour les revenus issus de la vente physique.
Le secteur des jeux vidéo, par nature numérique, s’est de longue date engagé dans la dématérialisation de sa distribution et de ses usages in-game. Elle semble désormais accélérer, et se généralise à l’ensemble des segments du secteur. Le succès des jeux dans le navigateur, des jeux massivement multijoueurs, des parties en ligne sur consoles et ordinateurs individuels et, depuis la fin de première décennie 2000, des jeux sur smartphones, a conduit les revenus de l’industrie à basculer en 2012 majoritairement dans la partie numérique de cette économie.
Évolution de la répartition du marché du logiciel de jeu, par type de revenus, en 2008 et 2014
Source : IDATE, Game in the cloud, Juin 2015
Une redistribution des rôles le long de la chaîne de valeur
Tous les segments du secteur des jeux vidéo sont donc impactés par la dématérialisation. Elle a conduit à désintermédier la chaîne de valeur et à remettre en question la place de certains acteurs en aval (distributeurs et grossistes principalement). Elle a offert de nouvelles prérogatives aux développeurs, qui ont désormais l’occasion de s’adresser directement à leurs clients joueurs. Le "online" aura finalement mis à mal une organisation industrielle en silo et aura permis l’apparition de pratiques et de service cross-plateformes salutaires aux joueurs autant qu’à la créativité du secteur.
Un repositionnement industriel et revalorisation de l’amont de la chaîne
Au niveau industriel, la numérisation des segments de marché du jeu vidéo a fait se déplacer la valeur ajoutée le long de la chaîne de valeur. La valeur ajoutée s'est rapprochée de l’acteur qui dispose du lien direct avec le client. C’est le sens de la désintermédiation que vit le secteur.
Dans le segment de marché du jeu sur ordinateurs individuels, la valeur ajoutée semble s’être ainsi focalisée sur le détaillant numérique (Steam, GOG), sur l’agrégateur (Big Fish Games) ou sur l’éditeur (EA Origin, NCSoft). Dans le segment du jeu sur mobile, la valeur ajoutée semble s’être déplacée vers les propriétaires d’appstores (Apple, Android, Amazon), et sur console, vers les consoliers eux-mêmes.
Sur Smart TV, tout reste encore possible entre les chaînes de TV, les géants du Web ou les tenants d’un écosystème cross-plateformes (Apple, Samsung, LG, Sony…). En tout état de cause, les gestionnaires de plateformes de jeux, grands bénéficiaires de ces évolutions ont dû également repenser les modèles de partage de revenus au bénéfice des studios de création de jeux.
La dématérialisation a de surcroît permis au secteur de continuer à générer des richesses supplémentaires, convertissant de nouveaux clients à de nouvelles formes de jeu et notamment les jeux ubiquitaires, disponibles simultanément sur plusieurs plateformes, fixes et mobiles.
Dans un contexte où la dématérialisation continue de gagner du terrain sur le marché physique, le secteur va poursuivra sa croissance dans les années à venir. Cependant, tous les maillons de la chaîne ne profiteront pas pleinement de cette croissance, à l’image des distributeurs, dont les prérogatives sont désormais assumées par d’autres.
Évolution des revenus des différents maillons de la chaîne de valeur des segments de marché du jeu vidéo (millions EUR)
Source : IDATE, Game in the cloud, Juin 2015
Les impacts de la dématérialisation
La dématérialisation a des impacts différenciés selon le segment de marché, le point commun demeurant la désintermédiation.
Le segment du jeu sur ordinateur individuel, dont les barrières à l’entrée sont accessibles aux acteurs indépendants, s’est diversifié et s’est ouvert aux jeux occasionnels et sociaux tout en préservant une place de choix pour les jeux massivement multijoueurs (World of Worldcraft) ou multijoueurs (League of Legend).
Le segment du jeu sur terminaux mobiles (smartphones et tablettes) s’est recomposé autour des propriétaires d’appstores, et du caractère viral et fulgurant de ces derniers. La connexion en standard et permanente de ces terminaux a également conduit à repenser le jeu comme une expérience ludique potentiellement continue. Cela implique d’ailleurs une approche davantage fondée sur la transformation d’une audience, sa conversion à l’achat, que sur la vente d’un produit.
Le segment du jeu sur console réalise sa mutation en permettant désormais à tout un chacun de télécharger à la fois le catalogue de jeux indépendants et casual mais également le catalogue de titres AAA. Par ailleurs, de nombreuses fonctionnalités s’appuyant sur le cloud ont vu le jour, qu’elles s’appliquent au jeu ou bien aux autres contenus, qu’elles encadrent la consommation, la gestion du compte utilisateur ou l’accès aux services de diffusion. Dans ce cadre, les consoliers restent la clé de voûte de l’économie de ce segment grâce à leur e-store.
Enfin, sur Smart TV ou TV connectée, le jeu vidéo prend la forme d’un flux streamé, on parle de cloud gaming ou de Game on Demand. Après une émergence remarquée dès 2010, ce segment encore jeune se consolide et semble (re)trouver de l’intérêt auprès des industriels.
Découvrez-en plus sur la dématérialisation du jeu video dans notre rapport dédié
Senior Consultant, DigiWorld IDATE
"The Cellular device (Tablets & laptops) installed base wil top 370 million devices worldwide in 2020, up from 54 million in 2013."
Connected cellular device is a device equipped with Internet access through cellular networks (2.5G, 3G and 4G). Connectivity is provided through an embedded module in the device (the SIM card could be removable or not). The main consumer devices addressed here are tablets and laptops. Some opportunities could be seen at the enterprise level especially to meet executive mobility requirements.
Unlike Wifi-only, the cellular module provides connectivity ‘on the go’. 3G and 4G connectivity provides an always-on feature which allows application notification reception. With Wifi-only devices, the device turns automatically into a sleeping mode. 4G could appear as a game changer as, unlike 3G performance, 4G offers more bandwidth and better latency which even excels Wifi performance. Nevertheless, unlike Wifi, the cellular connectivity is not free of charge. The end user needs to contract a specific data plan. The other drawback is that, even without a subscription, cellular products are more expensive than Wifi-only products because the bill of material is more expensive. Moreover, Wifi connectivity is increasingly widespread, with a Wifi module embedded in each new connected consumer electronic product worldwide, and is offered for free in hotels, restaurants and even bars. In some airports, the user can have free access for a short period and can buy units of time of Wifi connectivity.
The connected device value chain is mainly composed by two groups of players: the connected device manufacturers (Samsung, Apple, Nexus, HP, Lenovo and Dell) and the mobile carriers providing innovative models (subsidy-based and even on-demand connectivity models). Module makers are also very involved in this segment. They provide specific modules and chiefly promote the embedded SIM-based module.
33% of the tabelts are cellular, in advanced markets
In terms of market adoption, cellular products are clearly gaining traction and several market estimates show that around 33% of the tablets are cellular, in advanced markets. The adoption varies a good deal from country to country. Cellular laptops are mainly driven by the professional market as it is more affordable to use rather than using dedicated dongles. Nevertheless, according to industry sources, their adoption is very limited, especially on the consumer side. The main issue here is that the laptop market (cellular or not) has been in decline since the launch of the first iPad. Hence, cellular laptop offerings are still restricted to the business market and almost non-existent for consumer market. Nevertheless, the last year has seen the withdrawal of key laptop offerings, showing thus the real barriers for this market take-off.
How to simulate market adoption?
To stimulate market adoption, numerous business models are being offered to the end user, depending on the distribution/sale channel. Both OEM and connectivity players provide connectivity offerings. Indeed, even OEM players are offering connectivity services through pure paid services or even provide fixed month traffic amount for a specific time after device purchase, with a top-up option obviously available. In the domain of MNOs, beyond this wholesale model, they currently provide traditional retail connectivity and the popular subsidised model. Some carriers also integrate these devices in their mobile share plan. Innovative data plans should also become popular in a near future, such as the on-demand connectivity based on embedded SIM technology, ideal for short-time journeys, weekending or vacationing abroad, for instance.
The cellular device installed base will top 370 million devices worldwide in 2020
The cellular device installed base will top 370 million devices worldwide in 2020, up from 54 million in 2013.
• In 2020, tablets will be the most popular cellular device around the world, with 90% of the total market. In 2020, this market will be led by the USA, followed by China. Germany is expected to lead the EU5 market.
• In 2020, the personal devices segment should reach 270 million units, representing 72% of the market (a stable breakdown compared to 2015) but they will take 55% of the total world connectivity market, as professional devices generate more traffic and related ARPU is therefore much higher.
Find out more on Cellular Devices in our dedicated market report
Senior Consultant, IDATE DigiWorld
They have minimal impact on traditional telecom markets
In 2014, the OTT communication services market (the total of OTT revenues generated from VoIP, IP messaging and a share of social networking) will have surpassed 10 billion EUR. Growth is expected to continue and the global market value will reach 23.7 billion EUR by 2018, representing a CAGR of 21.6% from 2014 to 2018. Still, OTT counts for only a very small proportion of market value compared to that of the telcos.
What are the impacts of OTT communication providers on the telcos from a market value perspective? The figure below provides IDATE figures for both telco communication revenues and OTT communication revenues for the period 2012 to 2018. Telco communication revenues are composed of fixed telephony revenues, mobile voice revenues and mobile messaging revenues. OTT communication revenues are composed of VoIP, IP messaging and a part of social networking revenues (as already explained in detail in section 3).
Source: IDATE in OTT Communication Services, December 2014
The reality here is that compared to telco communication revenues, OTT communication revenues remain very marginal. As has already been seen, the OTT communication market value is set for growth with CAGR of 21.6% from 2014 to 2018. Still, looking at the big picture, even in 2018 OTT communication will only account for 3% of the total market.
Further, IDATE forecasts that the telco communication market will not decline over this period of time, although it will not particularly grow either, with a CAGR of 0.2%. As a result, the total communication services market (telco and OTT combined) is expected to see a CAGR of 0.6% from 2014 to 2018.
Judging from these figures, IDATE believes that the communication market is not a simple case of “OTTs taking away revenues from telcos”, which is the often-painted picture of the market. Rather, it is a case of the telcos maintaining their current market values, while OTTs are growing their market value by themselves.
Find out more about VoIP, IP Messaging, Social Networks and the main market players’ strategies in our dedicated market report
Head of Media & Digital Content Business Unit, IDATE DigiWorld
Who will come out on top?
The development of smart TV is inextricably bound up with the widespread availability of high-speed Internet access, a shift to more and more individual viewing and the proliferation of smart devices in the home. Together, these three elements are steadily revolutionising how viewers access their TV programmes, and providing them with an array of new functions and features.
Televisions can be connected to the Internet in several ways. Using:
• a smart or connected TV (direct connection, via Ethernet or Wi-Fi)
• a connected set-top box/DVR,
• a connected set-top box/DVR
• a streaming box or stick
• or a connected game console. or a connected game console.
Today, close to half of the televisions being shipped are smart TVs, even if their owners may not systematically take advantage of the Internet connection. At the same time, the market for streaming devices – whose main purpose is to play online videos – is progressing rapidly.
Within this market that is still populated by a great many solutions and services, several trends are taking shape:
• smart TV has shifted from "Internet-centric" to "video centric";
• managing connectivity with users’ personal devices has become a key issue, with app systems playing an increasingly central role;
• OTT services are moving to the TV and making real strides;
• viral platforms, which are “systematically” included on smart devices, are steadily consolidating their position in the video distribution chain.
Technological progress is also helping to vitalise the market, whether by increasing users’ connection speeds, through progress in compression thanks to the use of HEVC, or functionalities that improve the user experience, such as casting – i.e. the ability to send content from a personal device to the TV set.
The main stakeholders in the connected TV ecosystem can be broken down into three categories, based on their original sector of activity: consumer electronics (CE) companies, TV market players and the Internet’s leaders.
• CE industry players are working to improve their software interfaces, either through dedicated developments such as Samsung has done with Tizen, or by acquiring another company, as LG has done with WebOS. The aim is to capture the added-value in the marketplace, whether in the arena of services and/or by selling high-end devices.
• Players from the TV universe are developing their OTT products, and working to bolster their position on the software side of the equation with more open and hybrid platforms. The smart TV could enable them to renew ties with consumers, and better monetise their plans. Veteran TV market players nevertheless remains threatened by the shift to more individual viewing, the risk of being cut out of the equation and a dramatic loss of revenue. Smart TVs can actually accelerate the growth of on-demand services, which naturally threatens the business of TV channels, and especially specialty channels, as well as the business of those who assemble pay-TV packages.
• Lastly, companies such as Google, Amazon and Microsoft that dominate the Internet, are very knowledgeable about software, and changing consumer habits. So they are in the best position to deliver a top-notch user experience, whether in terms of smooth and intuitive interfaces, or providing recommendations based on user data. Their increasingly vertical positioning – covering everything from the content to the device – is also bolstering their potential to capture a growing portion of the video entertainment market.
Impact of the three scenarios on the smart TV market in 2025: size of the OTT market and smart devices used (billion EUR, %)
Source : IDATE, Connected TV, June 2015
The purpose of the three scenarios for “smart TV in 2025" is to determine which industries are likely to increase their control over the smart TV environment:
• TV market players: "Smart TV ";
• CE market players: "Consumer Electronics+";
• or Internet specialists: "Internet video".
The size of the OTT video market will vary considerably under the three scenarios, depending on how the environment evolves and so which industries prevail. We estimate that the market could climb to:
• 41 billion EUR under the most conservative scenario, “Smart TV”;
• 57 billion EUR if consumer electronic gain the upper hand, with earnings based on revenue sharing;
• 105 billion EUR if Internet companies prove the most successful, with an ecosystem tailor made for OTT video services.
The popularity of the different devices will also evolve along the same lines:
• the television will be used less to access services as the more disruptive scenarios come into being;
• eventually, the PC will be marginalised, replaced to a large extent by personal devices.
Regardless of the scenario, smartphones and tablets will be used more and more to watch videos, especially as viewing becomes an increasingly individual pastime.
Find out more on Connected TV in our dedicated market report
Senior Consultant, IDATE DigiWorld
Which pathways to broadband PPDR networks?
• Spectrum is at the heart of PPDR issues. Future usage for public protection and disaster relief (PPDR) worldwide is expected to concentrate on a limited number of frequencies. Allocation of broadband PPDR spectrum will be discussed at the WRC-15 in November 2015.
• 400 MHz frequencies are used for narrowband systems (TETRA, TETRAPOL, and P25) and considered for broadband.
• 800 MHz frequencies are used by narrowband networks in some countries or even regions and considered for broadband PPDR networks in some Asian countries.
• The 700 MHz band is the best candidate worldwide. In the USA, broadband PPDR spectrum was allocated in 2008 in the 700 MHz band. In Asia, the APT700 plan is likely to be adopted region wide; in terms of spectrum adoption in Europe and MEA, the question will be discussed at the WRC-15. The 698-703/753-758 MHz is a sub-band which could be made available for broadband PPDR at national level alongside SDL.
• TETRA-like narrowband technologies have served PPDR issues through dedicated PPDR networks using PPDR spectrum extremely well over the past decade. As these networks are by nature narrowband, they only support low data rates.
• There is now a clear global consensus that LTE will be the baseline technology for next-generation broadband PPDR networks. LTE still needs to be adapted: as from Release 12 of 3GPP LTE standards, LTE will be enhanced to meet public safety applications requirements. LTE extended capabilities are expected to be PPDR-friendly in future releases. Release 12 includes basic PPDR features. Its freeze, however, has been slightly postponed and some PPDR features formerly scheduled in Release 12 will be dealt with in Releases 13 and 14.
• A number of countries are actively working to provide a PPDR-friendly network to users. Several distinct initiatives are emerging around the world, ranging from commercial LTE networks using commercial spectrum on one side to dedicated PPDR networks using PPDR spectrum on the opposite side. Possibilities in between also exist, such as hardened LTE networks.
• Initiatives towards broadband PPDR systems are intensifying around the world. In Europe, a number of examples are flourishing, among them the Blue Light MVNO approach and the planned hardened LTE network pushed by the UK Home Office. On the other side of the Atlantic, the FCC had the opposite view and refused to use commercial networks. The First Responder Network Authority (FirstNet) is mandated to build a US-nationwide PPDR network with PPDR spectrum. Nevertheless, these latter two huge and complex initiatives are facing many hurdles.
Business models overview
Find out more about business models for PPDR, its status of allocations and PPDR over LTE-A
in our dedicated market report
Directeur de la business unit Economie des Télécoms, IDATE DigiWorld
L’annonce de la fusion entre Wind et Tre en Italie avec comme conséquence, le passage de 4 à 3 opérateurs mobiles pour le pays, confirme le mouvement de consolidation des télécommunications en Europe.
Ce mouvement prend deux formes :
D’une part, les opérations de consolidation fixe-mobile, comme récemment l’acquisition de l’opérateur mobile Base en Belgique par le cablo-opérateur Telenet, se multiplient. On peut ainsi citer également les opérations Orange-Jazztel en Espagne, BT-EE au Royaume-Uni, Numericable-SFR en France, Vodafone-Ono encore en Espagne, etc.
D’autre part, on assiste à la concentration du secteur des mobiles de 4 à 3 opérateurs, y compris dans les 5 principaux pays de l’Union européenne (voir carte). L’Allemagne a déjà basculé, avec la fusion entre E-Plus et O2, les filiales respectives de KPN et Telefónica, en 2014 au terme d’une longue instruction de l’anti-trust européen. Au Royaume-Uni, le projet de rapprochement entre Three, la filiale locale du groupe hongkongais Hutchison Whampoa (maison mère également de Tre en Italie) et de O2, fera de la même façon passer l’industrie mobile de 4 à 3 opérateurs. En Espagne, la vente de Yoigo, envisagée il y a deux ans par TeliaSonera, a été abandonnée faute de repreneur à des conditions que le groupe suédois aurait jugé raisonnables mais le marché hispanique est de facto concentré au sein de 3 opérateurs, le quatrième et dernier arrivé ne possédant qu’à peine plus de 6% de part de marché (en nombre de clients), en recul même depuis fin 2014. Rappelons qu’en France, Free Mobile a à l’inverse réussi à conquérir environ 15% des clients (mais quelque 8% des revenus) du marché hexagonal en trois ans. Dans ce concert, le marché français paraît ainsi le seul à continuer de marcher à contre-courant !
Au-delà des 5 grands marchés européens, une part significative des autres Etats de l’Union européenne fonctionnent eux aussi autour de 3 opérateurs mobiles, même 2 pour Chypre.
Au total, sur les 23 autres pays, tout juste la moitié (12 au total) ont encore 4 opérateurs ou plus. Mais pour certains (Danemark, Finlande, Luxembourg, Suède), le quatrième opérateur est resté embryonnaire. On notera aussi que si 4 pays ont encore profité du lancement de la 4G pour ouvrir le marché à un nouvel entrant (en Bulgarie, aux Pays-Bas, en Roumanie et en Slovaquie), des incertitudes demeurent sur la viabilité des nouvelles licences. La Roumanie est par ailleurs le seul Etat membre à abriter 6 opérateurs. Quant à la Belgique enfin, l’attribution d’une quatrième licence 3G au consortium Telenet-Voo au début des années 2010 n’a finalement pas été suivie d’effet : les deux protagonistes ont rendu leur licence en 2014 ! Enfin, il faudrait compléter cet état des lieux en soulignant la diversité des situations relatives aux MVNO, en nombre et en part de marché.
Malgré tout, avec toujours plus de 100 licences attribuées, le marché européen reste, à l’échelle communautaire, très morcelé !
Nombre d’opérateurs mobiles (MNO) dans les Etats membres de l’Union européenne
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