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Telco 2.0™ Content Distribution 2.0 Report:
Fixing the broken online video distribution value chain
How will the internet video market develop and what are the best strategies for aggregators and distributors?
Publication: November 2008
Report Context
As broadband pipes have grown fatter and fatter, the capability to deliver a quality video viewing experience over the internet has grown. This broadband capability has driven a tsunami of innovation in hardware, software and services. And, the eyeballs have followed. However the pace of this growth is already starting to put pressure on the existing business models. This report analyses the situation, reviews future scenarios and describes the strategies and actions required for each of the players in the value chain to succeed - Telcos, Content Providers and Applications / Equipment Manufactures
Background - Video: the Growing Bulge in the Fat Pipe
All recent data point towards video being the fastest growing segment of all internet traffic and the trends to continue for the foreseeable future. This is true whichever metric is used: absolute number of viewers, total time spent viewing, data traffic volumes.
Growth is not limited to a content category: adult, sports, movies and music are all rapidly moving online. The internet has also led to a completely new category: User Generated Content - home movies have moved out of the privacy of the living room and are becoming more and more professional.
Growth is also not limited to a specific geography: the movement online is a worldwide phenomenon. The internet has no respect for traditional geographies and boundaries.
Overall, the evidence points towards a future where the internet will be a critical distribution channel for all forms of video.
Distribution is no longer centrally controlled
Innovation in Video Distribution is nothing new and over the last century we have seen cinema, broadcast networks and physical media creating temporary shocks to older methods of distributing content. Despite the gloom of some predictions live events, whether sporting, theatre or music remain popular and happily co-exist with home entertainment. The transition to and evolution of these distributions channels and the associated business models will probably provide clues as the outcome as more or more content moves online.
However, there is only a certain amount of time in the day available for entertainment in general and watching video specifically. Legacy distribution channels are understandably worried about whether video online will be additive to or cannibalise their audiences.
A new distribution channel also brings opportunities for new entrants to enter markets and disrupt existing markets and business models. The key feature of the internet as an interactive distribution channel only adds to the opportunities and adds to the challenge of existing players to adapt.
This interactivity has even allowed individuals to become distributors in their own right.
More Growth + Less Control = More Unpredictability
Positively, individuals have generated their own content and made it available to the world. Negatively, some individuals have used interactivity to distribute content without regard of the rights of the copyright holders. Copyright holders have struggled to enforce their rights. Illegal distribution of content not only threatens the absolute value of content, but has lead to unpopular and complicated mechanisms to protect content.
The absolute volume growth has also placed the internet access providers under severe strain: attempting to increase prices to compensate for the growth in traffic and gain extra revenue through developing additional services is proving very difficult.
These forces have generated a considerable amount of experimentation in the market especially in the area of pricing models: subscription, pay-as-you-go, advertising funded, bundles with other distribution channels and offset/subsidy - all exist in a variety of forms.
How & why is the current model broken?
The net result is the video market is in a state of flux and increasing tension as key players explore their positions. Will order emerge from the chaos? In what form will this new order take? What will be impact on the existing players in the video value chain? And, will powerful new players emerge?
How can it be fixed?
We believe that Video Distribution on the internet will reshape the value chain and the current forces point towards great uncertainty in the short term. In these circumstances, the key step is to explore possible future scenarios to assess their viability and robustness in the face of change.
The research process
This study will evaluate the likelihood of three scenarios: Old Order Restored, Pirate World and New Players Emerge. Each of which will paint a picture of the future entertainment industry in terms of: technology developments; consumer behaviour; service uptake and usage.
The research will include comprehensive literature reviews, industry research and interviews with key staff from relevant organizations to shed insight on the needs and dynamics of the key players. Key Case Studies will bring the story to life and provide a context for both successes and failures. An economic model of the resultant value chain will be produced for each of the scenarios with analytical commentary.
Who will benefit from this research?
The study will be an invaluable guide to value chain players who will gain insight to where the current value chain is broken and the steps required to be taken to fix it.
Telcos will understand the strategic options available and the needs of the other players in the value chain.
Content Providers will understand the strategic options and their consequences, and the pressures on and needs of the Telcos.
Equipment and Software Providers will understand what features are needed to be enabled in their product roadmap.
Research Format
- 150+ page manuscript document
- + Powerpoint format slide summary
Price
£1,990 + VAT Single User License
£4,450 + VAT Group User License
Corporate licenses - POA
To Pre-Order or Register Interest
Please pre-register your interest in learning more about this report by emailing contact@telco2.net.
Please see also The Telco 2.0™ Content Distribution Research Practice.
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