Straight Talk Consumer and Entertainment Services
If the past few years have seen video slowly bleed from the home to mobile, the next few will see video-over-cellular viewing rapidly spread, thanks to aggressive moves by players from across telecoms, media, and technology. By 2023, the average US smartphone user will generate 19GB of video traffic on cellular networks per month, according to Ovum's forthcoming internet traffic forecasts. Here's three of the most important drivers of this trend:
- The rise and rise of social-first video. Around three years ago, Ovum predicted that YouTube's status as the world's most popular destination for user-generated video would be eroded by the likes of Facebook and Snapchat. We argued that as these social-first apps led more people to post more personal forms of video, YouTube's community would tilt more toward "professionals" – vloggers, multichannel networks, media companies, and brands looking to make careers and grow businesses on the back of "traditional" short-form content. Fast-forward to June 2018 and the photo- and video-sharing Stories feature of Facebook's Instagram has 400 million daily active users (DAUs), while YouTube's total DAUs are understood to still be in the tens of millions. Instagram's recently launched IGTV – which allows users to post and watch videos up to one hour in length – will further challenge YouTube's mobile video crown. IGTV will further drive mobile usage thanks to features baked into Instagram's DNA, such as smartphone-first formats, the social feed, and autoplay video. These are all features that YouTube will struggle to incorporate into its model.
- The twin suns of mobile and subscription video. In the pay-TV and video market, operators, internet platforms, and media companies will look to harness the growing importance of mobile and OTT video. Globally, the consumer mobile market will grow by 750 million connections to near 7.6 billion in 2022. Harnessing this growth will be particularly important for players in emerging markets, where low levels of disposable income, fixed broadband coverage, and credit card ownership have made traditional TV and OTT video a hard sell. In advanced markets, operators will look to OTT video to reduce churn and grow average revenue per user (ARPU) as mobile growth begins to slow and pay TV flattens or declines. In the US, for example, OTT video subscriptions will rise by 78 million to reach 209 million in 2022, compared to growth of just 25 million for mobile and a 6 million drop for pay TV (see Figure 1). Many strategies will center on partnerships between operators and third-party OTT video providers such as Netflix and Amazon; there were 395 partnerships in place at the end of May, 268 of which had a mobile dimension. Expect a handful of the world's largest operators to offer own-brand bundles like AT&T's WatchTV, a free add-on for subscribers to the company's unlimited data plans, Unlimited &More and Unlimited &More Premium.
- The promise – and price tag – of 5G. Ovum forecasts that subscriptions to 5G will reach 400 million worldwide in 2022, and account for as many as one in four mobile connections in the US and Japan. Although the technology promises faster speeds and lower latency – and could even serve as a substitute to fixed broadband in the home – its most immediate impact will be on mobile pricing and packaging, rather than new applications and services. Ovum expects operators' launch strategies to largely center on differentiating 5G by aligning or bundling mobile data with video services and devices of the highest quality. The need to increase ARPU will be especially pressing, given that operators will spend over $30bn on 5G radio access network equipment alone in 2017–22, according to Ovum's forecasts. This will present a tremendous opportunity for internet platforms and media companies, as rarely will strategists, technologists, and marketers at operators be so singularly focused and united on driving mobile video growth. As a result, Ovum forecasts that the average 5G subscriber in the US will generate an average of 35GB of traffic per month in 2023, compared to 6GB for 4G in 2018.
Figure 1. US, total subscriptions growth and CAGR by service type
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