OTT communication services


Soïchi Nakajima
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).

Total telco communication vs OTT communication revenues, 2012-2018 (Billion EUR)


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

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Connected TV


Jacques Bajon
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


Public safety spectrum & systems


Carole Manero
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


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After Germany, the UK and Italy: mobile consolidation continues


Didier Pouillot
Director of Telecom Economics Business Unit,




The announcement of the merger between Wind and Tre in Italy and the resulting shift from 4 down to 3 mobile operators for the country, confirms the telecom consolidation trend in Europe.

It takes two forms:

On one hand, with the multiplication of fixed-mobile consolidation operations, like the recent acquisition of mobile operator Base in Belgium by the cable operator Telenet. Other examples include the Orange-Jazztel operations in Spain, BT-EE in the UK, Numericable-SFR in France, and Vodafone-Ono, also in Spain.

On the other hand, we are seeing a concentration in the mobile sector, from 4 down to 3 operators, including the top 5 countries of the European Union (see map). Germany has already switched, with the merger between E-Plus and O2, the respective subsidiaries of KPN and Telefónica in 2014 after a long investigation by the European antitrust authorities. In the UK, the planned merger between Three, the local subsidiary of the Hong Kong group Hutchison Whampoa (also parent company of Tre in Italy) and O2, will likewise reduce the number of operators in the mobile industry from 4 to 3. In Spain, the sale of yoigo, proposed two years ago by TeliaSonera, was abandoned due to the lack of a buyer under terms that the Swedish group deemed reasonable but the Spanish market is de facto concentrated within three operators, the fourth and last arrival having just over 6% of the market (in number of customers), and having further declined since late 2014. But let’s recall that in France, conversely, Free Mobile has managed to win about 15% of customers (but some 8% of revenues) of the French market in three years. In this concerted process, the French market seems to be the only one continuing to swim against the current!

Beyond the five major European markets, a significant number of other member states of the European Union also have around 3 mobile operators, and only two in the case of Cyprus.

In total, of the 23 other countries, just half (12 in total) still have 4 or more operators. But for some (Denmark, Finland, Luxembourg, Sweden), the fourth operator has remained embryonic. Note also that while four countries still benefited from the launch of 4G to open the market for a new entrant (Bulgaria, the Netherlands, Romania and Slovakia), uncertainties remain on the sustainability of new licenses. Romania is also the only member state to host six operators. And finally, in Belgium, the allocation of a fourth 3G license to the Telenet-Voo consortium in 2011 was not finally acted upon: both protagonists relinquished their licenses in 2014! Finally, we should complete this inventory by highlighting the diversity of situations relating to MVNOs, in number and market share.

Nevertheless, with more than 100 licenses issued, the European market remains highly fragmented at Community level!

Number of mobile network operators (MNO) in the Member States of the European Union


More informations about IDATE's expertise and events :

www.idate.org      www.digiworldsummit.com      www.digiworldweek.com

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When AT&T plays video with DirecTV…


Yves Gassot
CEO, IDATE DigiWorld




After 14 months of study by FTC and FCC authorities, AT&T[1] just received the green light this 24 July for an operation to take over DirecTV (the number 2 satellite TV operator with 20 million subscribers[2] in the US and 18 million customers in Latin America) for $49 billion ($67.1 billion in debts).

Before approving an operation which will lead to hooking up 26 million subscribers in the US with the largest TV distributor (ahead of Comcast; see figure below), the FCC negotiated several conditions: (a) to make guarantees for the completion of a plan to extend its fiber infrastructure (Fiber to the Premises) to at least 12.5 million households[1], (b) to equip areas of concern such as schools and libraries, (c) to offer low-income households a discounted basic Internet access service, (d) to apply Net Neutrality by not using caps on Internet access to discriminate against video services in favor of DirecTV offerings, (e) to present the FCC with interconnection agreements made with the major suppliers of applications and programs (such as Netflix).


What reasons could there be for such a large operation, oriented towards Pay TV market that is saturated and under attack from new video streaming offers? (especially as after having paid some $14.4 billion in cash, AT&T will most likely need to invest tens of billions more in auctions for frequencies released in the 600MHz band).

The power to attract consumers with bundles? AT&T has not lost any time on this. Several days after receiving approval from the authorities, the operator made a new offer public combining DirecTV channel packages (or programs offered on the FTTx "U-VerseTV" network from the telecom[2]) with its cellular services (over 120 million subscribers): for a basic offer of $200/month, a household will have TV services with 4 receivers and 4 mobile telephone lines with 10GB to share. This is a promotional offer. In other words, it is a guarantee for a year in return for a commitment from the customer for two years (DirecTV) or one year (U-Verse) - which would represent a discount of $600. With this offer, AT&T Wireless[3] hopes to win subscribers away from Verizon[4], T-Mobile, and Sprint. While DirecTV is in competition with Comcast, the other cable companies, Verizon-FiOS and Dish hope that its subscribers can benefit from an offer that its competitors can't reproduce.

Possible Synergies? In its communications with investors, AT&T has focused on the synergies of the operation. The new combination could reduce the cost of acquiring TV programs 15% (/subscriber) due to the importance of size in this market. This is not insignificant as we know that programming represents some 10% of the cable market leader's expenses (Comcast) and that expense is growing faster than its revenues. In fact, AT&T became the leading Pay TV business with not only the ability to negotiate with channels, studios, and sporting leagues[5], but also the means to compete with Netflix and Amazon to invest in series by reserving exclusivity or priority. In the short-medium term, it is likely that DirecTV, whose linear TV model could lose its edge, will find that AT&T is an effective partner for developing video streaming offers.

Other synergies lie in distribution, marketing, and back-office expenses. DirecTV and AT&T Wireless are national brands with storefront expenses (2000 points-of-sale and 5000 employees for AT&T Wireless), sales campaigns, marketing tools, and manufacturing who can be combined to generate substantial savings.

A vector for expansion in Latin America? AT&T had prioritized on consolidating the mobile phone market in the US. This strategy reached its limitations when authorities blocked its plan to buy T-Mobile US. The telecom had, no doubt, envisaged this moment when Verizon Wireless spun off Vodafone to invest in Europe. In the end, AT&T prioritized its international investments in Latin America. This was illustrated recently by back-to-back investments in mobile phones in Mexico with the acquisition of lusacell, then Nextel. Beyond Mexico, DirecTV, which has 18 million subscribers in Latin America, can help promote AT&T's South American expansion strategy.

Will this operation mobilize others in the US market? We need to start from the principle that the FCC and anti-trust regulations will not authorize Mobile-Mobile operations (for example T-Mobile/Spring), nor any operations that would enable Comcast to increase its size significantly by absorbing another major cable operator (see the rejection of the Comcast-Time Warner Cable merger). Deutsche Telekom just moved to the 3rd tier of mobile operators (outstripping Sprint in the number of subscribers at the end of the second quarter) and we know that their management would be willing to sell T-Mobile US as soon as they can get the right price. They have defined the characteristics of an attractive offer as offering a relationship between the potential subscribers and the frequencies. This composite portrait has led to betting on an operation with Dish (14 million TV subscribers and rich with an enormous number of completely unused frequencies[6]). However, this seems difficult[7]. We could then consider Comcast which does not have quite as many frequencies (they have been sold to Verizon), but they have 22 million TV and Internet subscribers. Comcast has denied it is involved in discussions. There are still many other combinations without T-Mobile, such as Comcast-Sprint or Sprint-Dish[8].

Second question: should we look at the AT&T-DirecTV merger as a sign of future acquisition deals for TV groups and programs by telecoms? The answer is complicated. We feel that with the Internet offering faster and faster speeds and the application of Net Neutrality rules that favor OTT strategies, the main trend is towards "disintermediation" of video distribution (by DBS, cable companies, and telecoms) and it will be more and more difficult for national operators to maintain their independence (and margins) to offer TV distribution when faced with global players that self-distribute (Netflix). On one hand, it is a relatively long-term trend. On the other hand, this situation can also be seen as a factor for consolidation of cable companies and telecoms so they can be large enough to compete and retain their margins for video distribution and support the growth of their portion of the Broadband market (as with BT Sport).

More informations about IDATE's expertise and events :

www.idate.org    www.digiworldsummit.com   www.digiworldweek.com


[1] It is the leading US telecom with $133 billion in sales revenue in 2014 (of which over $73 billion was from mobile phones) and net earnings surpassing $14 billion.

[2] In 2014, DirecTV's net earnings were $3 billion for around $33 billion in turnover.

[1] This commitment moves closer to the direction recently taken by AT&T to participate in the competition among Google Fiber, cable companies, and telecoms, announcing the deployment of Gigabit networks nearly everywhere in the country.

[2] Representing some 11.5 million households.

[3] AT&T already had a sales agreement with DirecTV for a TV offer for its ADSL (and therefore outside U-Verse) subscribers. It then becomes possible to imagine that if this bundle announced in the past few days mostly centered on the Mobile/TV pairing, some AT&T subscribers would have access to a quadruple play contract. We should however note that the number of households without a landline telephone has gone from 10 to 40% in the United States in 10 years.

[4] Remember that Verizon had signed a cross-promotional agreement with Comcast (Mobile-TV) which had been a flop, even if the agreement had not been formally revoked recently.

[5] DirecTV is known for its agreement with the NFL and its Sunday Ticket offer.

[6] 65 MHZ in the AWS-3 band (1700MHz and 2100MHz bands), 40MHz in the AWS-4 band (2000MHz and 2100MHz), 5MHz in the 700MHz and 10MHz bands of the H-block band contiguous with its AWS-4 frequencies. .

[7] It might be that negotiations up till now have stumbled over issues tied to valuation of the spectrum as well as its terms (cash/exchange of shares/whether or not to maintain Telekom in the future entity).

[8] It should noted that Dish and Sprint started offering package deals in 2013; Dish with TV and Sprint with mobile phones.


Cloud TV: Video embraces IT


Jacques Bajon
Head of Media & Digital Content Business unit




The development of cloud TV solutions is part of the massive wave of change in today’s video market, and fuelled by users taking increasing control over their video viewing (on-demand, personal, multi-device, etc.). These changes require all service providers to adapt to the new paradigm and tailor their products to new viewer behaviours, and this inside an increasingly fragmented and competitive marketplace. The transition will also require them to find new ways to monetise content. The inherent uncertainties and complexity of this new state of affairs derive from the need to flexible, both from an operational standpoint and in the ability to roll out new services.

 The cloud TV market can be broken down into three components. Cloud TV is said to be private when the service is being supplied over the vendor company’s own infrastructure, and public when the infrastructure is located in a data centre outside the company’s premises, while hybrid solutions employ a combination of the two. These elements are combined with the various levels of service integration, ranging from infrastructure (IaaS) to PaaS (platform) and SaaS (software).

 The business model for cloud TV solutions is very similar to the one used by classic cloud computing products, i.e. payment based on consumption, or a monthly or annual subscription. It is the vendor of the cloud solution that invoices the TV provider. From a more general standpoint, adopting cloud solutions allows companies to convert their Capex into Opex by switching from a system of purchasing and amortising infrastructure to one of infrastructure rental.

 A number of players are involved in providing cloud TV solutions: the Internet giants and software specialists, telecom equipment suppliers and TV solution specialists who have beefed up the cloud dimension of their services. The television and home equipment sector has also expanded its product line to adapt to this new paradigm.

 Taking a broader perspective, the changes being forced on solution providers require them to acquire new skillsets, especially in the arena of software, but also in digital marketing, analytics, security, etc. These new skills can be acquired either through partnerships to create an ecosystem of solutions, or by taking over a specialised company.

 Cloud TV solutions are tailored to the customer’s needs, and typically rely on an ecosystem of partnerships, which can in fact cover the entire video content technical chain, from production to viewing, by way of post-production.

 Cloud TV products can occupy one or several niches, all aimed at satisfying customers’ new requirements. The market has been heavily influenced by video on-demand systems (incorporating nPVR), multi-device and unified interfaces, and systems for managing traffic surges on the network, notably thanks to hybrid cloud solutions.

 But there are still a number of lingering questions and obstacles in the cloud TV market. The infrastructures’ ability to manage a growing number of unicast streams raises concerns over quality of service further down the road. Regulatory uncertainties, notably over the use of private data and content copyright, continue to impede monetisation and product development. We expect that finding the optimal way to monetise video products will be the next big challenge the market will tackle. Because it lowers barriers to entry, the development of cloud TV will also increase competition in the video distribution market.

 It is also true that these solutions have helped make it easier to launch new video services – and especially more personalised and multi-device ones – by reducing the financial risks involved. This positive trend is on the supply side, where a great many vendors are positioned – including those from a TV industry is in the throes of a profound transition. But fully outsourcing content management does not seem to line up with market realities. What we are seeing instead is the development of hybrid cloud formats.

 How cloud TV products are positionedClients’ needs

Cloud TV products



Development of time-shifted viewing

·       nPVR: video recording in the cloud

·       catch-up TV services

·       (S)VOD

·       Time shifted TV

·       Management of consumption growth(server and unicast traffic peaks)

Multiple screens to address

·       Multiscreen delivery platform

·       Unified interface adapted to all screens, centrally managed

·       Encoding & adaptation of the video format to the consumption screen thanks to adaptive streaming

TV Everywhere

Indoor – Multiroom/outdoor

·       Multiscreen, network agnostic delivery platforms

·       Encoding, adaptation of the video bitrate according to available bandwidth and network used

Mid- to long-tail content – Personalized viewing – Live viewing

·       "Unlimited" storage

·       Consumption monitoring and recommendations for TV/VOD/Catch-up services

·       Live OTT for events and simulcasts

·       Virtualized playout centre (not ready for prime time)

Content rights management

·       DRM

·       Digital Rights Lockers (DRL)

Collaborative work

·       Centralised production, postproduction

Monetisation: Creation or improvement of advertising and pay-TV based business models

·       Dynamic ad insertion

·       Targeted ads inserted in the video stream or in the interface

·       Authentication

·       Centralised billing

Source: IDATE, "Cloud TV", March 2015

 Find out more about Cloud TV in our dedicated market report

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Telcos & Digital Services Strategies


Vincent Bonneau
TV Head of IDATE’s Innovation Business Unit, IDATE


Key IoT and OTT markets are expected to represent close to 245 billion EUR in 2014 and could reach 440 billion EUR in 2018.

 Telcos are being challenged on their traditional markets, with just 2.5% of CAGR for the upcoming years. Competitive pressure is coming from OTT players but also from within the telecom industry itself, with strong price pressure on connectivity products. At the same time, the development of OTT and, to a lesser extent, of IoT, itself often seen as a major threat for telcos, is increasingly perceived as an opportunity.

Within IoT and OTT markets, a few key markets are driving growth. The biggest markets are by far cloud and advertising (respectively 64 and 93 billion EUR in 2014), with more than 15% of CAGR in the next four years for both markets, thanks to RTB, SaaS and IaaS solutions. Video is the smallest digital market with 18 billion EUR but it is also the fastest growing, thanks to advertising-based formats and SVOD. Financial services are already well developed thanks to carrier billing and e-commerce, while NFC payments remain very marginal. Finally, hopes remain high around cellular M2M markets and the numerous associated markets (notably smart metering, connected health and smart cities), but the overall revenue growth remains moderate despite a huge expansion in volume.

In total, key IoT and OTT markets are expected to represent close to 245 billion EUR in 2014 and could reach 440 billion EUR in 2018, close to one third of telecom markets. Telcos can potentially benefit from a rich number of opportunities around these new markets. They can position themselves as service providers, competing head to head with OTT providers. There are countless other opportunities as technology enablers providing some of the building blocks.

Find out more on telco initiatives in digital services and the opportunities levered thereby

 in our dedicated market report

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WiFi-First: the new market disrupter


Carole Manero
Senior Consultant

“Wifi is a cost-effective solution. Additionally, WiFi-first services benefit from a wide-scale coverage indoors where cellular coverage is not always satisfactory.
For many MNOs, Wifi was perceived as disruptive. Logically, pure players embraced the Wifi market, launching hotspots and Internet access.

A considerable number of Wifi hotspots have been deployed around the world by pure Wifi players. This is set to soar dramatically, both in commercial venues and in homes. According to a 2014 iPass study, France is leading the pack with more than 13 million hotspots deployed, whilst the USA registered almost 10 million hotspots and the UK stands at almost six million hotspots. Growth is expected to be driven by more hotspots in homes, also known as ‘homespots’.”

WiFi Players’ Strategies

Wifi is a cost-effective solution, because it enables the reduction of the amount of mobile data consumed and consequently lower service costs.

Today, several distinct types of Wifi players can be identified:

Pure Wifi players appeared a few years ago. While Wifi could not provide true mobility, it was quite cheap and at the time where 3G technologies were not mature enough, throughputs offered were relatively better. Wifi is often used to offload in-excess data traffic by MNOs. Not surprisingly, several initiatives have emerged toward facilitating smarter and more efficient offload. They continue to develop their access point bases and implement agreements with MNOs. They specialise in facilitating domestic and international roaming between hotspot operators.

Wifi roaming has been a major focus since 2013. There is a huge demand from travellers for Wifi, to save money. But data roaming is still in its infancy. Cablecos, fixed and integrated players have all deployed Wifi hotspots and homespots. The rationale is to be able to monetise their Wifi network to non-subscribers and roamers.

The first WiFi-first players appeared in 2011 in the USA. Their rationale is to disrupt telecom markets with low-cost offers based on reduced up-front investments (no spectrum fees; unlicensed spectrum).

Cellular players or mobile network operators (MNOs) and integrated players have invested for years in Wifi, especially in Wifi data offloading to cope with mobile data surge. For many MNOs, Wifi was perceived as disruptive, as it provided some mobility or nomadism to the user without having to rely on their data plan.
OTTs are also considering Wifi.

Cable operators seem to gain the most from the WiFi-first concept. Mobile is increasingly a part of their proposition.
Wifi First
Source: IDATE in WiFi-first, June 2015


Find out more about changes in WiFi technologies, its resulting challenges, the WiFi market as a whole and players involved in our dedicated market report


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Audiovisual Industry Going Global: what options for European service publishers


Alexandre Jolin
TV expert at IDATE

The audiovisual market has always been a traditionally multinational industry. Within the industry, content production, publishing and distribution activities have highly varying levels of internationalisation. There has been a marked escalation of transnational mergers over the recent period, indicating a new phase in globalisation of the industry.

There is now pressure coming from two main angles: producers are faced with constantly increasing production costs, and distributors are faced with continually high CAPEX levels and new competition from OTT players. European service publishers have to reinvent their strategies in this new globalised context, which is dominated by North American players.

European video service publishers are under pressure

The audiovisual market has always been a traditionally multinational industry. Within the industry, content production, publishing and distribution activities have highly varying levels of internationalisation. However, there has been a marked escalation of transnational mergers over the recent period, indicating a new phase in globalisation of the industry.

There is now pressure coming from two main angles: producers are faced with constantly increasing production costs, and distributors are faced with continually high CAPEX levels and new competition from OTT players. European service publishers have to reinvent their strategies in this new globalised context, which is dominated by North American players.

Threats and opportunities from globalisation for the main player categories in the value chain
Source: IDATE, Audiovisual industry going global, April 2015

Americanisation of the European audiovisual sector


Several markers point to a trend of increased Americanisation of the European audiovisual industry:

Increased number of US acquisitions of European players:

- in the content production segment, including the acquisition of Endemol by the private equity firm Apollo Global Management in 2012 and the takeover of All3Media by Liberty Global and Discovery Communications
- in the TV channel broadcaster segment, including Liberty Global's purchase of a 6.4% stake in ITV and the acquisition of Channel 5 by the Viacom Group in 2014
- in the distribution segment, including Liberty Global's acquisition of Virgin Media and Ziggo, and the takeovers of Ono and Kabel Deutschland by Vodafone

The emergence of oligopolistic situations in new market segments:

- iTunes dominates the global transactional VOD market
- Amazon Prime Instant Video and Netflix in particular dominate the global and European SVOD markets

Consumption focused around North American programming

Focused strategies vs. market conquering strategies

Faced with globalisation of the audiovisual industry led mainly by North American players, European players are adopting two types of generic strategy:

strategies focusing on their core business and domestic market, characterised by:

- moderate investment in native language productions
- acquisition of North American and international fictional programming to ensure high viewing numbers during prime time
- OTT strategies based on reusing content rights already acquired as part of own brand or joint-venture services

strategies aimed at conquering markets via business diversification and international development, including:

- increased investment in original content productions that can be exploited abroad, particularly via international co-productions
- acquisition of exclusive first-run premium content
- OTT strategies based around new services that exploit broader rights catalogues than what is available via broadcast networks

Find out more about the reasons behind globalization, its models and impacts for the audiovisual industry in our dedicated market report



Future TV 2025: Internet TV & entertainment operators: disruptions ahead


Jacques Bajon
Head of Media & Digital Content Business Unit, IDATE

Linear TV is still the main source of revenues for the video industry – however, traditional players in mature markets see their business shrinking and have to adapt to an increasingly dense ecosystem, notably regarding competition from internet players. One of our estimates is that linear TV revenues will drop from EUR 368bn in 2015 to 344bn in 2025, against skyrocketing On-Demand TV revenues jumping from EUR 25bn to EUR126bn in 2025. In our disruptive scenario we assume the complete disappearing of home video up from 2022. Nonetheless, the total videomarket will grow with an annual average rate of 1.4% worldwide.

Disruptive scenario: Global TV market, 2015-2025 (billion EUR)
Future TV 2025
Source: IDATE, Future TV 2025, May 2015

In developed countries, the TV sector has been suffering from what is expected to be a lasting state of stagnation, brought on by a growing number of channels; the relative saturation of pay-TV markets, and increasing competition from the Internet for viewers and advertising money.

Keeping in line with current market trends, a snapshot of the market 10 years from now includes on-demand services having a relatively small impact on revenue (accounting for around 10% of the total market in 2025) and a global market that will continue to grow by around 3.5% a year, on average – a large percentage of which will come from emerging countries. Asia/Pacific will become the world’s biggest market, while growth in the main European markets will be weak, and possibly even negative.

But another, far more disruptive picture is also possible. One where on-demand becomes the viewing method of choice amongst consumers, and live viewing confined largely to special events. Under this alternative scenario, on-demand services account for close to 30% of the sector’s revenue in 2025.

Two phenomena are at work here:

on-demand services replace linear TV but generate less revenue per customer for an equal number of subscribers;
on-demand services undermine the revenue earned by linear services by lowering both ad rates and subscription prices.

As a result, the market grows much more slowly than under the “business as usual” scenario, and even enters into a lasting state of recession in developed countries.

In this declining market, veteran market players – i.e. channels and distributors – lose a share of their income to the leading entertainment operators. Only content producers, which earn a growing share of the revenue being generated, are not affected by market deflation.

Veteran players are thus having to contend with two big issues:

shrinking TV retail markets;
decreasing share of the margin earned on these markets.

Find out more details regarding disruptions in TV content distribution and user behavior in our dedicated market report

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