Video service is a growing industry and a new source of revenue. Over the past ten years, new video services have emerged one after another and the industry has developed rapidly. It is estimated that the number of worldwide pay TV subscribers will exceed 1 billion by 2017. Among these, IP video service subscribers will increase from 80 million to 180 million. Moreover, mobile video data usage will increase 24-fold in the next six years, and video services will become an even greater form of communication and recreation.
Thanks to the rapid popularization and low cost of 4K television, set-top boxes, and content, there are now more than sixty carriers providing 4K video as a basic service worldwide. In 2020, video services will account for 70% of mobile data traffic.
Many forward-thinking carriers have proactively formulated distribution strategies and increased their capacity to provide video services. The high-quality experience these services provide has increased consumer spending. For example, China Telecom Sichuan added 1 million new 100 Mbit/s broadband subscribers after introducing 4K television services in 2014. LG U+, the carrier in South Korea to introduce high-definition video services for mobile phones, increased revenue by 50% within three years.
Network Re-architecting: Shifting from Technology-based to Experience-based
Customers care most about video playback performance, which is also the most direct and important benchmark for evaluating video services. There are four main aspects to playback performance: video resolution, loading time, buffering time, and channel or source switching time.
A Massachusetts Institute of Technology study shows that viewers begin to abandon videos when they take longer than 2 seconds to load. Every additional second of delay results in approximately 6% more viewers leaving. Fast video loading put stringent requirements on the network. A stable connection with a bandwidth greater than 50 Mbit/s, round-trip delay lower than 20 ms, and packet loss rate under 0.01% is necessary to open a 4K video in less than 1 second. For high-definition mobile videos (1080P), bandwidth with more than10 Mbit/s and round-trip delay lower than 30 ms are required. This represents a major challenge for traditional networks designed for Web and standard definition television services. As video services move towards 4K on fixed networks and 2K on mobile networks, traditional networks must re-architect themselves with a focus on user experience in order to maintain their service experience and quality of service. This is necessary if they are to continue exerting influence in this competitive industry.
The past ten years have seen change, not only in consumers' demands for video services, but also in the nature of the video services industry as a whole. Over-the-top (OTT) technology has revolutionized the distribution and circulation of content, but has drawbacks by design with regard to providing a video experience and collecting payments. Carriers' advantages specifically lay in their user base and sophisticated payment systems. By integrating these with the content advantages of OTT players, carriers can reconstruct their content value chain.
Carriers are already shifting their focus from infrastructure to user experience, and the rise of 4K will allow carriers to gain a competitive edge through experience-based differentiation. More than fifty carriers worldwide already offer gigabit services, and an increasing number of national regulatory organizations have increased or are planning to increase the threshold speed for broadband Internet. China Telecom Guangdong has announced that its broadband service will start at 50 Mbit/s by 2017; this is an inevitable result of economic development, consumer demand, and market competition.
Video is already a major recreational activity enjoyed by many people. 4K resolution for televisions and 2K for mobile phones will become standard, and multiple screens and increased intelligence will become new directions of development for the video service industry. The maturity of ultra-broadband networks, as well as changes in consumer demand, and the strength of the video services industry's value chain, will bring about exciting new opportunities in the industry. By focusing on the key elements of video service development, carriers will undoubtedly achieve growth and success in this field.