Seizing New Opportunities in the Converging Media, Tech & Telecom Ecosystem

How telcos and Media companies can use their strengths to build leadership positions in next-generation entertainment, based on creating partnerships with tech innovators in the ecosystems.

The consumer entertainment experience is on the cusp of a revolution in the new convergent era. Imagine as a sports fan, you can watch your favorite stadium event live at home and pause it in real-time to choose from a variety of viewing positions around the stadium while your fantasy sports team updates simultaneously. Or what if you could read an AR-enabled book to your child in which animations jump off the page at exactly the right moment? What would it feel like to be Spiderman swinging virtually through New York skyscrapers with perfect rendition and timing?

The potential opportunities for players in the telecoms and media space are certainly exciting, but understanding how best to position themselves for success is challenging. New technological opportunities and expectations from consumers are transforming established industry structures, and new partner ecosystems are forming. These involve a wide range of players across telcos, consumer electronics manufacturers, broadcasters, rights owners, start-ups, and many others. New alliances are being formed, such as Disney and Verizon's strategic partnership related to 5G, while BT is partnering with VR start-up Condense Reality. The competitive landscape is becoming increasingly intense as convergence across technologies and sectors progresses.

In this blog post (which is part of the?Collaboration series) I explore some of the main areas of new opportunity and consider what these might mean for companies that need to carve out new roles in the changing media ecosystem.

The Emerging Shifts Impacting the Modern Media Terrain

Today we can clearly observe multiple trends shaping the environment for telcos and media players today, of which I would like to describe five.

• Firstly, there is a major shift in viewing habits towards streaming, with long-term online video viewing stimulated by the growth of?over-the-top (OTT)?services and collaborations among traditional players. Although linear television still accounts for a sizable share of TV-viewing time, there is a move away from focusing on original and exclusive content towards an emphasis on the customer experience.
• Secondly, users are diversifying their consumption habits and seeking increasing personalization, enabled by the emergence of a wide range of non-linear video services that provide an abundance of content and interactivity. This is resulting in the development of a new ecosystem of players and technologies, such as AI-powered recommendation engines, targeted advertising, and many others.
• Thirdly, bundles of OTT services are continuing their upward trend and, beyond content bundles, offering niche features, including 5G mobile cloud gaming. This is spurring innovative collaborations and leading to the emergence of new and converging ecosystems.
• Fourthly, live events, including sports and entertainment, will continue to play a central role, with 100 to 150 events per year, and audience shares that could exceed 60 percent of households in a country. The value generated by these events is extremely high in terms of advertising and subscription fees, therefore, quality and reliability of the media service is of utmost importance.
• Finally, additional types of services will emerge as augmented reality (AR) and virtual reality (VR) technologies reach maturity. Technological advancements can help market players to remain competitive, though the use of new technology needs to be coupled with quality content to generate the desired positive effects.

Overall, consumers globally are seeking new forms of entertainment, additional content, new user experiences, and cutting-edge technologies. User experience is key and can range from simple features for making life easier to immersive experiences or emotional connectivity. High user experience is particularly important in the gaming and e-sports

The Fragmented Future of Streaming: How Telco and Media Companies Can Thrive

We all can see that streaming has become the dominant way of consuming content, and OTT platforms around the world are gaining in popularity and seeing increased growth in adoption. The COVID pandemic has further accelerated this growth as consumers turned to streaming services for entertainment during lockdowns.

Historically, we have seen a change in consumer behavior as technology evolves in the entertainment sphere. For example, we transitioned from audio to video as we moved from radio to television. A similar trend can be seen today as consumers adopt smart or connected devices instead of linear TV and broadcast services.

Today, with the advent of smartphones, better connectivity, and faster data services, mobile viewing of content is the preferred mode of consuming content for the younger generation. Statista reports that over 2.33 million people worldwide were watching video content on their mobile phones in 2021, up from 1.67 billion in 2017.

The partnership between streaming services and telco providers brings immediate benefits to both parties. For telco providers, it is an opportunity to differentiate their service offerings, while for streaming providers, it is a chance to gain new subscribers by bundling their content with distribution carriers, especially for mobile.

Netflix was the first streaming service to partner with telco providers, starting with its launch in Australia in early 2015. The company completed 10 agreements across the Asia-Pacific region by May 2018, and other established OTT companies in the region have followed suit.

The collaboration between streaming platforms and telcos is at a turning point, with the ready infrastructure from telecom providers such as networks, data centers, CRM, billing systems, customer support, and more leveraged to provide a great experience to customers around the content offered.

One great example is streaming platform subscriptions. With the help of telco providers, streaming companies can offer customers the ease to manage their subscriptions from a common subscription management platform.

Carrier billing arrangements, in particular, have proliferated in recent years. Direct carrier billing enables consumers to pay for streaming video services and other OTT media through their telco provider. This arrangement is convenient, especially in geographies where credit card and bank account penetration is low. In Africa, for example, Netflix has tied up with Vodacom and Telkom South Africa, where credit card and banking penetration is low. As a result, direct carrier billing services that integrate telco and OTT platforms have flourished.

OTT players are poised to provide a natural boost to the telcos’ revenue, driven by innovations such as super-fast IP networks, smartphones, and the shift in consumer preferences towards freemium-based business models. OTT applications indirectly contribute to telecommunication operators’ revenue by actively using their services. Overall, this partnership brings benefits to both parties and creates a more convenient and seamless experience for consumers.

Telco-Media Partnership Strategies: Retaining Customers through Bundles, Marketing, and Own OTT Services

As someone who has spent years in the tech,?media,?and telecom space, I can say that telco-OTT partnerships are a crucial strategy for retaining customers. These partnerships not only help telecom providers to retain high-value customers but also serve as a marketing tool. For instance, Vodafone's ad featuring Grandmaster Viswanathan Anand enjoying Prime Video content while roaming is an excellent example of how video as a platform has gained prominence as a medium of choice across age groups.

One of the popular strategies undertaken by telcos is creating OTT bundles. A study suggests that having an OTT bundle makes 42% of the respondents spend more on their carrier plan. Bundling helps telcos to improve ARPU and retain users while aiding OTT players to increase distribution, break into new markets, and boost paid-user share.

Another natural partnership between telcos and OTT platforms has emerged as a good strategy, and many players have already entered this venture. Telcos can leverage their infrastructure advantage and customer base with OTT partners' premium, on-demand content libraries. Meanwhile, OTT platforms gain access to telcos' existing customer bases via built-in video apps, integrated billing mechanisms over existing fixed or mobile connections, and promotional access to OTT content and other exclusive deals.

Another long-term strategy adopted by telecom operators is the introduction of their own OTT service. This strategy enables telcos to have full control over the service, but it is a cost-intensive process that requires a longer go-to-market approach.

Revolutionizing Consumer Experiences: The Power of AR, XR, and 5G in Tech, Media, and Telecom

I am excited about the new consumer experiences that are being made possible through augmented reality (AR) and extended reality (XR). Here are a few examples that showcase the potential of these technologies:

• Danish TV recently created an interactive table for the Tour de France that combined AR with real-time data visualization, touch screens, and live virtual set graphics. This provided viewers with an immersive experience that brought the race to life.
• British Telecom (BT) has developed 5G Edge-XR, which creates augmented and virtual reality experiences to complement the telco's sports-viewing services. The service will provide extended reality (XR) viewing of sporting events for an even more immersive experience, leveraging the potential of BT's 5G network. BT is also working with Condense Reality on XR services and has developed a system for streaming live events through a hologram-style, three-dimensional volumetric video, in parallel with regular broadcast television.
• 5G broadcasting is also gaining relevance, with SK Telecom achieving the first?live TV broadcast?based on a 5G network in 2019, streaming high-quality video with less than a second of latency. Dimension's volumetric studios allow for the creation of next-generation XR content, virtual production, and digital humans, such as holograms. Dimension has collaborated with SK Telecom and Nexus to create realistic augmented reality content. Such B2B projects have the potential to bring immersive content to life and eventually become a B2C product or service.
• Another exciting possibility is the embedding of 5G into wearables, which will lead to new opportunities for the use of VR/AR glasses, such as optimized real-time facial recognition. Chip manufacturers are partnering with major telcos, smartphone OEMs, and XR viewer manufacturers to create and commercialize XR viewers. LG Uplus, a Korean telecom company, has partnered with China's mixed-reality product developer and start-up, Nreal, to create the world's first 5G-enabled AR glasses.

These developments are creating new opportunities for consumer engagement as well. Telcos can take advantage of specialized software (SaaS) developed for the video domain, such as Wicket Labs, which will allow them to increase the audience lifetime value while improving customer acquisition and service engagement and reducing churn. Sweden's Vionlabs has developed a series of innovative AI engines that use multi-layered, scene-by-scene analysis and other data sources, such as a consumers' watch histories, which allows viewers to spend 25 percent or more of screen time looking for something they want to watch. Customer engagement is key to driving uptake and creating stickiness.

Finally, there are multiple possibilities for differentiating via content. This can include having exclusive content (e.g., original entertainment programs) in your portfolio, providing new types of entertainment content (e.g., short videos), granting access to/aggregating third-party platforms, etc., which may be exclusively offered to customers on 5G plans. For example, Verizon partnered with Disney+, Hulu, and ESPN and offered content to its 5G customers in either the "Disney Bundle" or the "Play More and Get More" bundle.

Transforming Telco Strategies for Next-Generation Media Experiences

To move forward in delivering more personalized and interactive services, telcos must adopt a strategy that places open ecosystems and partnerships at its heart, leveraging the convergence of infrastructures. There are three aspects that are especially important for telcos to consider:

First, it's crucial to align strategies across media and technology. Telcos must ensure their views on technology are in line with their media strategies. A coherent approach to media activities is necessary to fully realize new commercial opportunities for media.

Second, telcos must leverage their regional strengths and consumer insight. Close relationships with consumers can be leveraged as a competitive advantage, for example, by creating content with local touchpoints. Focusing on use cases that create the most added value within each consumer market is key to success.

Finally, telcos must prioritize ecosystem innovation. The formation of distinctive partner ecosystems should be the key platform for innovation, enabling the creation of differentiated offers that provide unique value for the consumer that stretches beyond traditional media offerings.

In the new era, telcos are becoming leading players in co-creating the next generation of tangible media experiences, increasingly building partnerships in media and entertainment. Telco operators must now rise to the innovation challenge.

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