New study evaluates business models for over-the-top video services
Ericsson and Network Strategy Partners, Inc., conducted a detailed business analysis on cloud-based over the top (OTT) video delivery, which is expected to dominate the network traffic for years to come.
Study analyzes five different scenarios based on various economic and technical variables and provides business results based on multiple parameters.
Two-sided business model, which promotes the creation of open platforms, delivers the highest ROI.
Ericsson, in partnership with Network Strategy Partners, has released its findings and recommendations on various scenarios for moving OTT video delivery into new business models with guaranteed quality of service. The results revealed a marked difference in a broadband service provider’s (BSP) profit streams depending on their selection of a specific business model. The analysis takes relevant economic and social parameters into account and offers a payback timeframe, cash flow analysis, and ROI for each model. Today’s mainstream pricing model of a fixed monthly subscription is inconsistent with subscribers’ quality expectations for video services and broadband service providers’ (BSP) profitability requirements. However, there is currently a mismatch between subscribers’ willingness to pay for Internet video, often delivered on a best effort basis, and the cost of providing it.
The study found that a "two-sided" telecoms business model delivers the highest ROI. This approach promotes the creation of open platforms to help other service providers (enterprises, SMEs and government) interact with subscribers in more efficient ways. As a result, the BSP generates revenue from two parties – the retail service provider and subscribers.
Service providers can increase revenues and improve ROI through use of the "two-sided" business model by:
Collaborating with WebTV services by offering superior video quality and content than that delivered by over the top video
Offering value-added network services such as bandwidth on-demand to enhance WebTV
Allowing users to control their services using advanced policy management – this provides a new stream of revenue and helps reduce churn by more effectively addressing users’ needs
"In order to implement more sophisticated pricing and business models for over-the-top video delivery, service providers must ensure that their networks are intelligent and flexible," said Michael Kennedy at Network Strategy Partners. "This is achieved through Smart Networking which includes broadband policy management, tools such as Deep Packet Inspection (DPI), and application and service layer traffic management. This study provides key recommendations on which over-the-top video delivery business models will drive the highest payback while satisfying consumer demand for quality service."
"The success of Internet video can be a mixed blessing for fixed and wireless broadband service providers as most use a flat rate pricing model," said Don McCullough, vice president of marketing for IP and broadband at Ericsson. "More sophisticated pricing and business models are needed for profitable delivery of web video services. As a result of this study, we’ve found that a smart All-IP network can be a competitive advantage for service providers as they move to a ‘two-sided’ telecoms business model. The combination of an All-IP network and two-sided business model delivers the highest value and ROI as it generates revenue from retail service providers and subscribers."
Study analyzes five different scenarios based on various economic and technical variables and provides business results based on multiple parameters.
Two-sided business model, which promotes the creation of open platforms, delivers the highest ROI.
Ericsson, in partnership with Network Strategy Partners, has released its findings and recommendations on various scenarios for moving OTT video delivery into new business models with guaranteed quality of service. The results revealed a marked difference in a broadband service provider’s (BSP) profit streams depending on their selection of a specific business model. The analysis takes relevant economic and social parameters into account and offers a payback timeframe, cash flow analysis, and ROI for each model. Today’s mainstream pricing model of a fixed monthly subscription is inconsistent with subscribers’ quality expectations for video services and broadband service providers’ (BSP) profitability requirements. However, there is currently a mismatch between subscribers’ willingness to pay for Internet video, often delivered on a best effort basis, and the cost of providing it.
The study found that a "two-sided" telecoms business model delivers the highest ROI. This approach promotes the creation of open platforms to help other service providers (enterprises, SMEs and government) interact with subscribers in more efficient ways. As a result, the BSP generates revenue from two parties – the retail service provider and subscribers.
Service providers can increase revenues and improve ROI through use of the "two-sided" business model by:
Collaborating with WebTV services by offering superior video quality and content than that delivered by over the top video
Offering value-added network services such as bandwidth on-demand to enhance WebTV
Allowing users to control their services using advanced policy management – this provides a new stream of revenue and helps reduce churn by more effectively addressing users’ needs
"In order to implement more sophisticated pricing and business models for over-the-top video delivery, service providers must ensure that their networks are intelligent and flexible," said Michael Kennedy at Network Strategy Partners. "This is achieved through Smart Networking which includes broadband policy management, tools such as Deep Packet Inspection (DPI), and application and service layer traffic management. This study provides key recommendations on which over-the-top video delivery business models will drive the highest payback while satisfying consumer demand for quality service."
"The success of Internet video can be a mixed blessing for fixed and wireless broadband service providers as most use a flat rate pricing model," said Don McCullough, vice president of marketing for IP and broadband at Ericsson. "More sophisticated pricing and business models are needed for profitable delivery of web video services. As a result of this study, we’ve found that a smart All-IP network can be a competitive advantage for service providers as they move to a ‘two-sided’ telecoms business model. The combination of an All-IP network and two-sided business model delivers the highest value and ROI as it generates revenue from retail service providers and subscribers."
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