The telco-OTT truce

OTT players have come to stay and telcos have started to realise that partnering is the way forward.
The digital savvy customers don't want to be tied to any device or timing to see their favourite shows.
The digital savvy customers don't want to be tied to any device or timing to see their favourite shows.
Analytics, Apps, Boston Consulting, Collaboration of telcos and OTT, Content creation, Content distribution, Etisalat, Icflix, IPTV, Media streaming, New revenue streams for telcos, OTT players, Pay TV, Starzplay, Telcos and OTT, Telcos as service providers, Zain Group, Content
The OTT communications model is gradually moving towards a revenue generation model for both telcos and OTT players.
The OTT communications model is gradually moving towards a revenue generation model for both telcos and OTT players.
Telco-OTT partnership has so far focused mostly on three areas: video, music and social media.
Telco-OTT partnership has so far focused mostly on three areas: video, music and social media.

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EXPERTS:

Jonathan Haysom, vice president, home product marketing, Etisalat

Malek Hammoud, executive director, strategy & business development, Zain Group

Christian Bartosch, associate director, Boston Consulting Group Middle East

Maaz Sheikh, co-founder & CEO of Starz Play Arabia

Carlos Tibi. founder & CEO, icflix

 

CommsMEA: How can telcos and OTT players collaborate better than the current scenario?

Christian Bartosch: An approach to consider is to create a two-sided business model, which will allow the operator to invest in the capacity and speed required to deliver good services to customers. Furthermore, OTTs can work closely with operators to enable traffic management and content cashing, rather than delivering mostly encrypted content to the operator’s network.

Jonathan Haysom: OTT providers today are looking for telco partners with scale, reach, reliability as well as best-in-class networks to ensure their products are usable and enjoyable. We actively seek out partners from the OTT world that provide opportunities for mutual growth. Some of our partners want to be brought directly into our eLife TV ecosystem to leverage our reach and become part of our award winning content line-up while some partners are hosted at our data centres to ensure world class streaming performance for their end users. On top of that we also have our own OTT service, eLifeOn, which extends our eLife TV experience to mobiles, tablets and TVs across the UAE. For partners on our TV platform who don’t have OTT reach we are able to deliver that for them via this service.

Malek Hammoud: Today, digital disruption is a reality that transforms customers’ needs and preferences in light speed. People are moving towards more unified products and service offerings across multiple digital verticals where quality and speed becomes the ultimate factor of choice. Given this fact, neither the telcos nor the OTT players can stay long without the other. In this context, I can say there is a good traction in telco & OTT collaboration, yet it is still far from being sufficient to maximise the value for all stakeholders.

Carlos Tibi: OTT players have come to stay and telcos have started to realise that partnering is the way forward. The first step is to measure and understand the customers. Having this information will allow telcos to make better decisions about improving an existing service or creating a new one. Network operators need to adopt big data in order to continue in the data-driven decision era. Telcos will need to simplify their product line-ups, digitise their networks and operations and consolidate to gain scale and capabilities. Telcos also need to stay one step ahead and embrace technological innovations and digital trends to stay ahead in this competitive and fast-moving market.

Maaz Sheikh: The relationship between telcos and OTTs is a very natural one. Telcos provide three things to this relationship- the infrastructure for delivery, the billing capability, and they provide a brand and trusted relationship. The only thing they lack is a service with content and that’s where the OTT operator comes in.  We work with 14 telecom operators in the MENA region, so, we are seeing very strong opportunities to work with them. And we see the telcos delivering the right things in terms of all these three capabilities.

CommsMEA: Can we look forward to a unified platform with offerings from various OTT players offered as a customisable service by telco operators? Will OTT players be okay to partner with other OTT players for this?

Bartosch: We are seeing this in place to some extent from content delivery network (CDN) providers such as Akamai. However, the larger tier one OTTs such as Amazon, Google, Facebook and Netflix are aiming towards control of the e2e traffic to ensure a competitive advantage rather than cooperating with competition.

Haysom: Customers seek out simplicity as lives become busier and more complex.  Multiple apps aren’t conducive to simplicity. As an aggregator with our eLife TV service we are in a unique position to bring several content partners on-board to deliver a holistic and simple entertainment platform for subscribers. We are able to deliver premium entertainment services on a single IPTV platform already and we aim to continue to simplify and delight our customers with this approach in our OTT environment.

Hammoud: Given the existing competition and fragmentation of the market for OTT players, I see it very unlikely to happen in the short term. Yet, I believe consolidation will be inevitable around OTT products and services under unified platforms due to consistent changes in technology (e.g blockchain, and Web 3.0) and evolving customer needs and preferences. Undoubtedly, telecom operators need significant transformation to become the optimum resort for this unification.

Sheikh: Yes, I think OTT players should be open to doing this because this is the right thing for the consumer. Some telecom operators are already doing that. If you look at eLife service for example, in the UAE, it offers a transactional video-on-demand service, but then it also offers StarzPlay on the same platform, so the customer can choose between Etisalat’s VoD services, or StarzPlay.  So, Etisalat is already doing this and I think we will see more and more of such offerings in the coming times.

Tibi: We are slowly seeing this being adopted in the region, for instance Ooredoo has launched the region’s first 4K TV service into a single STB offering apps, on-demand services and live TV via the company’s fibre network and in-home Wi-Fi to multiple screens, thus, giving customers a wider choice of content to choose from.

CommsMEA: What are three main areas in which OTT players seek cooperation from telcos and what are three main areas in which telcos seek cooperation from OTT players?

Bartosch: In terms of OTT players, they would seek the control for quality of service (QoS) for services such as speed and latency; provision of a flat bandwidth of pricing to stimulate the consumption of video, possibly as a wholesale deal where OTTs would include the bandwidth cost into the customers’ bills (e.g. Netflix);  and net neutrality or fair access for all OTTs.

Regarding telcos, they would wish for the provision of revenue share in exchange for providing QoS base bandwidth, ability to shape traffic and act as a single stop shop to customers, including the billing relationship.

Haysom: OTT players need a world class carrier to ensure their product is the best for their end users. Telcos with superior networks attract customers due to their high performance and wide reach.

Telcos can also simplify the payment processes for OTTs via direct carrier billing enabling them to focus purely on delivering their content in their ecosystem and let the carrier partner, take care of the network and billing.

Hammoud: In my opinion, OTT players’ primary needs from the telcos are access quality, customer data and operational support (e.g. direct operator billing).

On the other hand, telecom operators’ basic needs from OTTs are differentiation in products and services, better monetisation of existing data propositions and new revenue streams.

Sheikh: The type of collaboration we are looking for is more on the marketing side. Telcos are the touch-points to the customers, so they can access the customers much more easily than we can. So, we rely heavily on them for marketing the service to their customers.

Tibi: OTT services become the video-on-demand arm for the telecom operators and for OTT services to be able to leverage their infrastructure for localised billing purposes. This gives telecom operators another opportunity to increase the ARPU for data consumption and make legal streaming available to a wide audience.

CommsMEA: Too many OTT players in the market- how good or bad is that in your opinion? What’s the competitive advantage you gain from that?

Bartosch: We believe that the OTT ecosystem differs from the telco ecosystem, in that it thrives on rapid innovation, agility and trial and error. A healthy OTT ecosystem requires many players to preserve this agility.

From a traffic and content perspective, 60% of the fixed and mobile access traffic in most markets comes from the top 10 OTTs, such as Google, Facebook and Netflix, hence a few players are dominating the market. Many OTT players help telcos to avoid dependence of a few “super” OTTs.

Haysom: It’s always good to have more choices for customers and as a telco it gives us the ability to see what’s working and what’s not in the growing local OTT scene.  We have a very strong OTT proposition with eLife ON and our customer are already engaging with the service. As other OTTs grow in popularity we are able to grow with them either organically through mobile data plans or together as partners in a B2B2C mode.

Hammoud: Too many OTT players mean a wide range of choices for the customers to select the best for them. The wisdom of digital market is that it’s brutally honest in allowing only the best ones to survive and wiping out the rest very quickly. We are always looking for the best value for the customer and try to establish the right partnerships with the OTTs that we fully believe can deliver this promise. Zain’s recent engagements in media, advertising and shared economy services are very nice examples of this.

Tibi: The arrival of new OTT players in the market has actually helped raise more awareness and curiosity of Icflix amongst viewers where we have seen an increase in the number of subscribers. Also with the rise of streaming services in the region, audiences will now be more inclined to subscribing to multiple streaming services as this will now give them a wider choice of content to choose from, making entertainment options for the entire family limitless.

CommsMEA:An ideal world would mean not having to subscribe to multiple services, and getting an amazing experience irrespective of the device and the geographical region we are in, and according to our tastes. How far have we made the progress towards that yet?

Bartosch: If one considers subscribers in a country like Finland with a flat rate data plan who have a Netflix subscription, then these customers are relatively close to an ideal state. On top, many operators offer direct charging of Google Playstore content, which could be extended to a one-stop shop for Android device users.

However, as Apple has shown, owning of customer billing relationship is also key for OTT players. Telcos will therefore have a hard time becoming the one stop shop, the risk rather is that Google will become a global mobile virtual network operator (MVNO) with soft SIMs and hence will be able to disintermediate telcos.

Haysom: On the ability to consume content on-the-go across the UAE, we have that covered today; outside the UAE however this is still challenging. The studios and rights holders execute different deals across regions and to navigate that and ensure a consistent product can be challenging. For carriers with good subscriber reach in other parts of the world it makes the job a little easier; just looking at the top global OTT providers for example, their experience and catalogues vary widely depending on the country.

Hammoud: This is a very nice description of an ideal world where both telcos and the OTT players would love to see it happening. However, it requires not only the willingness from telcos or OTT players but also the full fledge compliance with state related external factors like regulatory environment and tax regimes that vary across the countries. Unfortunately, it is early to say that we have made a significant progress on this so far.

Tibi: Customers will always have the need to subscribe to multiple services since OTT players will offer exclusive and original content to differentiate themselves within a competitive streaming TV market.

CommsMEA: The experience and expertise of OTT and the infrastructure of telcos can merge to create excellence in media delivery- what’s hindering it so far then?

Bartosch: In mobile networks, one of the hindrances is the technical architecture of existing mobile networks with tunnelling between packet core and device. Another issue is the competition for the customers’ awareness and interest, where OTTs and telcos are increasingly fighting for the advertising revenue.

Haysom: Even beyond our fibre reach we are investing in a dedicated fixed LTE network to ensure even those in the remotest areas in the UAE have access to quality broadband. We take pride in our service delivery and are proactively monitoring down to the OTT streaming service level to ensure delivery is as good as it can be. Etisalat invests in content delivery networks (CDNs) as well as large caching infrastructure to bring the content as close to the subscriber as possible to boost performance. Excellence in media delivery is progressive and we already are employing a proactive mind-set for our subscribers across the UAE.

Hammoud: Nothing. This is indeed what we have done in Zain by establishing the JV company with Iflix to bring the most innovative VOD platform in the Middle East. In my opinion, telecom operators consider digital verticals beyond standard partnership models where the value is quite minimal. The strategic question for the telecom operators should be “how we can improve our positioning in a specific digital vertical value chain through utilisation of  existing assets and capabilities?” This will help the telecom players to think differently and will fasten the pace of transforming them from traditional telcos to complete digital service providers.

Tibi: Every operator in the region is different, with different environments, complexities, expectations and ambitions. Operators want to offer diversified products and services but are sometimes reluctant to collaborate with OTT players and third parties.

Sheikh: The industry is still in its infancy. Two years ago, there was a lot of skepticism in the market that OTT wouldn’t be successful. The industry was questioning the infrastructure readiness, the methods of payment, the user behaviour, etc. Now, you see players like StarzPlay and Netflix that are doing extremely well in the region. In two years, the industry has changed a lot. So, you just have to give it another two or three years before the industry starts to develop. If you look at the traditional broadcast pay TV industry, it’s 25-30 years old. If you look at the OTT lifecycle, you are in the early stages. So from our point of view, it has been very successful. We have certainly expedited our subscriber growth projections. But I think it’s going to take another year or two before it becomes a mass product.

CommsMEA: What has been your biggest success story yet?

Haysom: Our eLife TV platform and its OTT partner product, eLifeON. Between those two products we offer customers incredible choice of content and the ability to watch it easily across the UAE. Basic content providers rapidly became “content partners” as a result and love to work closely with us to expand the service. Customers love the convenience of having the big premium OTT and TV brands on one platform, the on-the-go experience with eLifeON and a single bill.

Hammoud: In the OTT / media space, we have agreed with Iflix to setup a JV company in the region to bring a differentiated VOD service offering for the customers. It will be a perfect way of joining forces with Iflix’s technology and content on one side and Zain’s brand, access and customer reach on the other. The commercial rollout of Iflix services across Zain’s operations is imminent, and we are extremely confident of its success. The main theme of the iflix rollout will be: “Say Hello to Unlimited Entertainment-Wherever, Whenever”.

Sheikh: We are just under two years old as a company. 2016 was our first full year and we have been growing tremendously. On a daily basis, we have 1.5 million unique visits to our website, across the region from Oman to Morocco. We sign up over 2000 customers a day. The biggest success is that we are always ranked as one of the top websites in the region. For example, in the UAE, we are ranked 34th amongst the top websites. In Saudi, we have been ranked as high as 16th. For a company that’s less than two years old, to be ranked so high is quite remarkable.

Tibi: Icflix’s prime focus has always been original Arabic programming, as there is always a constant demand for local content. We co-produced our first Tunisian feature Chbabek El-Jenna (Borders of Heaven) and launched our first animated TV series, Dunia, introducing the first Arabian teen female superhero. The social comedy WOH! is Icflix’s second original Arabic title produced from Tunisia following the success of the Award-winning Chbabek El-Jenna. We are continuously enhancing our user experience through our website and native applications to meet the demands of a rapidly growing market and deliver the best user experience possible. Icflix is now available on more than 12,000+ devices. We are now able to deliver 4K streaming at the best bandwidth to visual quality ratio compared to any other OTT service in the region.

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