Tag Archives: telco 2.0

Online Video Gets the Headlines, IPTV the Revenue

An interesting analysis from Telco 2.0 compares the business of YouTube versus Hulu in 2008. The table summarizes the key data used in the analysis:

YouTube Hulu
No of videos/day 1000+ million 3-4 million
Average duration 2.75 min 27.5 min
% clips with ads 3-4% 80%
Average CPM $10 $15-20
2008 Revenues $118 m $52 m
2008 Loss $91 m $9 m

According to Telco 2.0, YouTube would be generating revenues of $118 million, versus $52 million for Hulu, while the low percentage of videos carrying ads in YouTube would make them lose $91m versus only $9m for Hulu.

Hulu business model is closer to that of broadcasters and it shows in a better margin. To make their disruptive model fly in the next years, YouTube will count on:

  • decreasing costs of infrastructure: storage, processing, bandwidth and efficient data centers
  • ability to place ads in clips from amateurs and semiprofessional creators
  • agreements with media companies to become their online video platform in return of a share of ads

Meantime more players are coming to the party, like CBS betting on tv.com to compete with Hulu (NBC Universal and News Corporation’s online video joint venture).  But, in a crowded market, also others are getting weaker, like Joost giving up their P2P model and with few options to survive only as one more flash video site. Despite Joost’s announcement, do not discount P2P TV, that is far from dead in China.

As for IPTV, according to a report from Gartner in September:

“Worldwide subscriptions to internet Protocol television (IPTV) services are on pace to reach 19.6 million subscribers in 2008, a 64.1 per cent increase from 12 million subscribers in 2007, according to Gartner, Inc. Worldwide IPTV revenue is projected to total $4.5 billion in 2008, a 93.5 per cent increase from 2007 revenue of $2.3 billion.”

In 2008, no doubt Online Video got the headlines, but the IPTV Telcos still got the bucks.

Transforming Telcos: Telco 2.0

Imagenio
Two weeks ago I found, as a guest post at GigaOM, an interesting article from  STL Partners  on the future of broadband. While I disagree on a few points, it does bring some fresh ideas about the evolution of telcos:

Wholesale. Increasingly important model as we see in wireless with MVNOs reselling capacity from operators. New application service providers could be envisioned to re-sell connectivity as part of a Service, like high-def video streaming with some QoS assurance on top of the basic package. “Postage and packing included” models will proliferate, like the Amazon Kindle, where Amazon pays for the EVDO service on behalf of the end-user.

Two-side business model. Service providers will monetize revenues from new sources, like: advertisement, e-commerce or access to user profiles, location and presence.

– The control of the Home Network. What is simple for techies and early adopters it is still too complex for the mainstream. Telcos are in a privileged position to manage the home network for their customers and make life easy for their mainstream users.

Virtual Networks overlaid on Internet. Broadband Service  Providers can offer best-effort Internet as a standard package to comply with net-neutrality issues, and still deploy overlay networks with a guaranteed QoS for bandwidth demanding or sophisticated usages: Hi-Def Videoconferencing, Hi-Def live events broadcast, etc. This overlay networks could be provided from the telco as a wholesale for Applications providers to re-sell it bundled with their Service.

Where I disagree with STL Partners article is in the inability of telcos so sell applications or media content. IPTV and Mobile TV are in their infancy yet, and operators are still learning. Many telcos have launched successful services, like Telefonica Imagenio (IPTV), AT&T U-verse (IPTV), KDDI Lismo (Music) or Telstra Mobile TV, that demonstrate how user experience in content services can be improved through technology, and this is something telcos do master.