For carriers of all stripes, video is no longer just an extra, nice-to-have service; it has become a basic, must-have offering.
In fact, scores of both wireline and wireless providers around the world now offer TV and related video services as a basic product, with more providers regularly jumping on the bandwagon. As a result, IPTV subscribers alone are expected to more than double from 90 million in 2013 to 191 million by 2020, with the Asia-Pacific region accounting for the lion's share of that growth, according to the latest forecast from Transparency Market Research. Further, the research group projects that global IPTV revenues will more than triple from nearly $25 billion in 2013 to more than $79 billion by the end of this decade.
Just as notably, more than 60 carriers across the globe now offer 4K/UHD video to their subscribers, up from none just a couple of years ago, according to market estimates supplied by Huawei Technologies Co. Ltd. . Prominent examples of this trend include China Telecom Sichuan, which introduced 4K TV service in 2014 after rolling out faster broadband speeds for its customers.
The more forward-thinking carriers are embracing video as a basic service because they see the potential to add new subscribers, retain more of their existing ones, create new revenue streams and drive overall revenue higher. In South Korea, for instance, LG U+ increased revenue by 50% in three years after introducing HD video service for its mobile customers.
Video services can also produce hefty indirect dividends for providers, generating greater uptake of their other services. In the China Telecom Sichuan case cited above, the carrier added 1 million new broadband subscribers to its 100Mbit/s data tier once it rolled out the 4K TV service.
Introducing video is not exactly a slam dunk, though. Customers must receive a high-quality user experience or they will abandon the service in droves. In a study conducted by the Massachusetts Institute of Technology (MIT), for instance, viewers began to abandon videos when they took longer than a mere two seconds to load. Each extra second of delay resulted in about 6% percent more viewers leaving the video behind.
The need to load videos quickly places strict demands on the provider's network. For a viewer to open a 4K video in less than one second, Huawei figures that it takes a stable connection with bandwidth greater than 50 Mbit/s, roundtrip delay lower than 20 milliseconds (ms) and a packet loss rate under 0.01%. Similarly, the vendor figures that bandwidth greater than 10 Mbit/s and a roundtrip delay of less than 30 ms are required to deliver HD mobile video properly.
Such stringent requirements represent major technical and operational challenges for traditional networks designed for far less demanding voice, data and standard definition TV services. To cope with these challenges, carriers must find ways to overhaul their networks, "re-architecting" them to focus primarily on the quality of the user experience, rather than simple service delivery. Without such a fundamental shift in focus, providers will not be able to thrive in the highly competitive video market.
Besides making that shift in focus to user experience, carriers need to take into account the swiftly rising popularity of over-the-top video. Instead of battling these new entries for video market share, traditional providers can strike carriage deals and incorporate OTT content into their overall video offerings. They can then take advantage of their infrastructure, customer base and payment system strengths to deliver a better user experience for OTT viewers while broadening their roles as video aggregators.
With its growing use in education, healthcare, retail, finance, government, hospitality and numerous other commercial and institutional settings, video is also transforming into a service that extends well beyond the traditional linear entertainment offerings of yesteryear. So it has clearly become a service that's more basic to daily life than ever. It's time that it got treated that way.
This blog is sponsored by Huawei.
— Alan Breznick, Cable/Video Practice Leader, Light Reading