http://www.fierceonlinevideo.com/story/wireless-providers-make-ott-strategy-key-future-profitability-report-says/2015-04-01
Wireless providers make OTT strategy key to future profitability, report says
Despite ongoing concerns about the amount of bandwidth that over-the-top video
is taking up on wireless networks, the popularity of the medium means that
carriers, including AT&T, T-Mobile US and Verizon, are making wireless OTT a
"key pillar" of their future plans, a Wells Fargo analyst research note says.
While each carrier is taking a slightly different path in their respective
mobile video strategies, "we believe OTT is a boon for the wireless industry
overall," according to analysts Jennifer Fritzsche, Eric Luebchow and Caleb
Stein, co-authors of the note, sent to investors on Tuesday.
The question, according to the note, is how carriers will capitalize on mobile
video, which currently takes up 55 percent of all mobile traffic and may grow
to 72 percent of traffic by 2019, according to a Cisco report.
"VZ's view of the world is that a linear TV asset does not to be owned, as
content costs eat up all the margins. Rather, it believes its 108MM wireless
base will be a key asset to content players to attract more 'eye balls' and
enable VZ to develop new video delivery methods," the analysts noted. "AT&T has
taken a diverging path, as evidenced by its purchase of DTV. In T's view, the
critical bundle is one that includes broadband, video AND wireless."
The popularity of online video services like Netflix helped drive growth in the
wireline broadband business, the analysts explained as a background, and will
likely do the same for the wireless industry. Verizon and AT&T have already
begun to shift their strategies to accommodate online video: In 2012, both
carriers changed their data pricing to an "a la carte type approach" which gave
them more breathing room on the revenue side and will drive future growth, the
note said.
While the analysts' conclusion--that mobile video is the real game-changer for
the wireless industry--is one that most millennial-aged consumers already
share, it's an indicator that yet another traditional market is being swayed by
the allure of OTT.
