Streaming Media
Mobile viewing is already on the rise even before mobile
operators prepare for 5G to skyrocket data demand. But monetisation remains up
in the air.
There’s a perfect storm brewing. Mobile video is growing at
a phenomenal rate putting current networks under strain, at the same time as 5G
looks as if it’ll ride to the rescue. Subscribers may love it, but monetizing
5G is easier said than done and with more video traversing mobile networks than
ever before, quality of experience (QoE) is becoming a major headache.
"That’s because when subscribers experience poor
quality when streaming video our research found that consumers blame the
operator, not the OTT [over-the-top]," says Indranil Chatterjee, SVP of
products, sales, and marketing at mobile traffic management firm Openwave
Mobility, in an Openwave blog post. "And it is only a matter of time
before they churn."
Numerous forecasts point toward the rapid growth of video,
often in tandem with breathless predictions for the rollout of next-generation
wireless broadband. Ericsson’s November 2018 Mobility Report, for example,
predicts video traffic to grow 35% annually through 2024—increasing from 27
exabytes (EB) per month in 2018 to 136EB in 2024. Put another way, video’s
share of the global mobile traffic will rise to 74% from 60% today "as 5G
establishes itself as the fastest generation of cellular technology to be
rolled out on a global scale," the reports states.
According to findings from Ofcom’s Communications Market
Report in August, some 95% of UK 16to 24-year-olds own a smartphone. The
average amount of time spent online on a smartphone is 2 hours, 23 minutes a
day. This rises to 3 hours, 26 minutes among 18–24s.
Ooyala’s Q2 2018 Video Index shows video plays on mobile
devices were up more than 13% from a year ago, the biggest increase for
smartphone plays in five quarters. It was also the first quarter ever to see
smartphones top 50% of all plays. The previous best share for smartphones was
just 47.5%.
"As solid as these mobile numbers are, they’re just the
precursor to higher mobile share coming in the next several quarters as content
providers—especially sports teams and leagues—begin to cater to an audience
that is slowly, but assuredly, moving away from traditional video
delivery," according to principal analyst Jim O’Neill.
Ready for the 5G Rush
In western Europe, nearly a third of citizens will be on a
5G contract by 2024. Ericsson reports: "It has become apparent that 5G
anticipation is much greater than that experienced in the lead-up to LTE."
The adoption of 5G will lead to the continent consuming the
second-highest amount of data via user handsets. Europeans will use 32GB per
month in 2024, compared to 6.1GB today.
"The increase in video data traffic per smartphone user
has three main drivers: increased viewing time; more video content embedded in
news media and social networking; and an evolution to higher resolutions and
more demanding formats," according to Ericsson’s report.
While most mobile video today is streamed as low as 360p, higher-definition
streaming is already on the rise. "The average resolution of a YouTube
video in some LTE networks is already up to 720p," states Ericsson.
Openwave tracks the same trend. While most operators it
suggests experienced growth in mobile video from 2010 to 2015 as a result of
increased video viewing, in the last 3 years, growth has been driven more by
moves to higher-bandwidth content (from Netflix, YouTube, etc).
"As operators prepare for the dawn of 5G, there is one
sure-fire certainty," says Chatterjee. "HD content (including 4K and
soon 8K content) and therefore mobile video will soar."
Some operators yet to fully monetise 4G are already looking
at 5G as "an enterprise vertical enabler" according to Dimitris
Mavrakis, research director at ABI Research, quoted in the Openwave blog post.
"5G will initially be used to improve the consumer user experience—and
surprise surprise—mobile video will spearhead this strategy," he says.
In 2016, mobile video represented 48% of traffic, and ABI
Research predicts that 5G’s mobile video growth will accelerate in 2022. By
2025, video will reach 78% of traffic, a whopping 40% of which will be 4K
video.
By Q1 2018, there were 465 million unique mobile subscribers
in Europe, equivalent to more than 85% of the population, with 4G having now
established itself as Europe’s leading mobile technology, according to the most
up-to-date figures of the Global System for Mobile Communications (GSMA),
presented in it’s "The Mobile Economy: Europe 2018" report (go2sm.com/
gsma18). It expects 4G adoption to peak in 2023 before declining as consumers
upgrade to 5G.
In fact, according to this report, the mobile operators’
body is predicting that by the middle of the next decade, there will be 203
million 5G connections in Europe, representing 29% of total connections.
Significant capex by mobile operators in the post-2020 period will expand 5G
network coverage to three-quarters of the region’s population by 2025.
Another priority for mobile network operators remains
identifying the commercial returns for the fifth-generation network.
The GSMA, for one, predicts that Europe’s mobile economy
will account for €720 billion, or more than 4% of the region’s entire GDP, in
just 3 years’ time.
"5G networks in Europe are expected to provide coverage
to almost three-quarters of the region’s population by 2025 and Europe is set
to become the world’s third-largest 5G market behind Asia Pacific and North
America by this point," says Mats Granryd, GSMA director general.
5G Commercial Rollout
Although there is still headroom for 4G growth in many
markets, the first 5G launches by European mobile operators are already
happening. In the UK, EE is leading the charge. It demoed a number of 5G live
trials at the end of 2018, including switching on 10 trial sites across East
London by end of December aimed at business and consumers.
The operator, which has the advantage of a fixed line
operator in its parent BT Group, also made the first live broadcast using
remote production over 5G 10Gbps backhaul for the soccer final EE Wembley Cup
in November, delivered from Wembley Stadium (North London) to BT Sport’s base
in East London.
Analyst Paolo Pescatore, SVP of consumer services at MiDIA
Research, called this hugely significant. "There are plentiful
opportunities for BT Sport to be more creative with its editorial and
production output as well as gain additional benefits from cost
transformation," he says in a November 2018 post (go2sm.com/midia).
"[R]emote production and live contribution ... means lower costs with few
cameramen needed to cover an event onsite. Other broadcasters, media and
content owners should be looking at seeing how 5G could be used in their own
productions especially news agencies."
According to ZDNet EE has begun upgrading hundreds of towers
to 10Gbps transmission in city centres, including Birmingham, Cardiff, and
Belfast, as it preps for a nationwide 2019 commercial launch. The network is
being focussed on densely populated hot spots such as London’s Hyde Park and
Manchester Arena, which it says carry 25% of all data across the whole network,
despite only covering 15% of the UK population.
5G smartphones from multiple (unnamed) partners are expected
to be available this year. EE also plans to make a 5G Home router available.
Rival Vodafone UK plans to switch on 1,000 5G sites by 2020,
including commercial launches later this year in rural parts of Britain like
Cornwall and the Lake District, according to Telecoms.com.
It grabbed attention by claiming the nation’s first holographic
call using 5G in autumn when England women’s football captain Steph Houghton appeared
live from Manchester as a hologram in Newbury near London.
Vodafone in Italy spent €2.4 billion to acquire the spectrum
that will underpin its national 5G network. This spectrum became available in
January, with Milan earmarked by the operator as "Europe’s 5G
capital," with near blanket coverage expected soon.
In December, Vodafone and Sky Italia partnered on a claimed
first live new broadcast via 5G in Italy.. Rival Telecom Italia (TIM) is also
investing heavily in its 5G network build and has undertaken a number of
high-profile trials, to showcase its efforts, including lighting up
"Europe’s first 5G state" when it turned on 5G base stations in the
principality of San Marino and operating drones over Turin using 5G.
A major 5G field trial continues in Munich to investigate
large-scale TV broadcasts over 5G. The project is supported by Telefónica
Germany and Bayerischer Rundfunk, the Bavarian state broadcaster.
The auction in Germany this spring of the 2GHz and 3.6GHz
radio spectrum is being keenly watched by those concerned that Telekom
Deutschland, Telefónica Deutschland, and Vodafone will monopolise the bidding
according to an August 2018 post by MVNO Europe.
MVNO Europe (MVNO stands for mobile video network operator)
claims German operators are holding back innovation and disrupting competition
by not giving other operators adequate access to the spectrum.
According to the same August 2018 post, "MVNO Europe
believes that the behaviour of incumbent German operators runs counter to
enabling competition and innovation." Chairman Jacques Bonifay adds that
"such a market evolution may prevent the emergence of pan-European and
global 5G-based services delivered by European companies, given that it will be
impossible to ‘scale-up’ in Europe if Germany cannot adequately be served."
Betting on Short-Form Content
Looking to capitalise on the mobile explosion, funding is
being pumped into short-form content.
The biggest bet is by Quibi ("Quick Bites"), the
$1 billion network spearheaded by Jeffrey Katzenberg with investment backing
from Disney, Fox, NBC Universal, and Alibaba. It will hope to succeed where the
likes of mobile content ventures Studio+ from Vivendi and go90 from Verizon
failed.
BBC Studios, which launched a high-end, short-form fund with
Anton Capital, and Viacom Digital Studios are among big media attempts to
capture new audiences with premium-produced short-form content.
Their target is social media channels Facebook Watch,
Snapchat Discover, YouTube, and Instagram (with its new video app IGTV).
"There is an increasing realisation that the days of
trying to build your own network and website then acquire and monetise an
audience is hard and incredibly expensive," said Kelly Day, president of
Viacom Digital Studios (VDS). "On the other hand, our ability to scale up
by distributing across the social landscape is such an enormous opportunity
that it is worth revenue sharing with those platforms. If you do the math, it
works out [in] your favour."
Viacom is busy reversioning its show brands like Spongebob and The
Daily Show for social media.
Facebook’s decision to move to mid-roll, non-skippable ads
has also fuelled an appetite for mid-form content between 10–25 minutes.
Amazon Prime Video’s acclaimed Julia Roberts’ thriller Homecoming was
made as a 10-part, 22-minute series with mobile on-demand viewing in mind.
In her talk at IBC, Day continued, "In the early days
of online video platforms there was a perception that digital short form was
all cats on skateboards. We’ve evolved to a place where you are no longer at
the mercy of the linear clock. How long your content is, is dictated by the
story, by the platform, and your budget."
Capital Outlay
Prioritising customer satisfaction and preventing churn are
the cornerstones of telco operator (fixed and mobile, or increasingly
converged) strategy. Consequently, the more grounded take on 5G is that it
won’t be a big bang in which we are all switched onto blazing fast speeds but a
gradual uplift in which winning applications will only become apparent over
several years, perhaps a decade, of evolution.
What is most notable is that there is no one-size-fits-all
technology approach, no magic bullet to next-gen networks. The huge increases
in capacity, performance levels and increased speeds must be supported by an
efficient fixed infrastructure. This includes installing millions of small
cells for network densification as well as buying spectrum licences. Almost all
applications require getting a fixed (wireline or optical) network close to the
user. Operators are weighing the merits of a wide toolkit of solutions to
achieve this, often in combination, including the cable technologies of DOCSIS
3.0 (Data Over Cable Service Interface Specification 3.0), G.fast, NG-PON
(Next-Generation Passive Optical Network), and fibre to the
home/premise/building, as well as 5G wireless. And satellite can’t be dismissed
either as a valuable backhaul channel to carry the sheer load of data or its
continued unmatched ability to broadcast to digital outcasts.
Although market research firm Ovum expects adoption of 4K
video and other such bandwidth-intensive applications to grow quickly, it will
remain difficult to convince the mass-market consumer to pay a premium for
10Gbps over lower-speed tiers such 1Gbps. Consumers do want higher quality,
especially for video, says the research firm, but most consumers will not even
need a 1Gbps pipe within the next 5 years, since a 50–100Mbps throughput will
be sufficient for most consumers’ internet apps to work and work well.
It seems that, in Europe at least, market competition and
regulation, rather than consumer demand, are driving the trend toward gigabit
services. For all operators, a gigabit upgrade offers the opportunity to appeal
to the tech-savvy, high-spending customer, perhaps with new VR/AR game
streaming, but Europe-wide connectivity objectives are also jump-starting
national governments into action.
By 2025 all European households in EU member states need to
have access to at least 100Mbps connectivity (upgradable to Gbps). In addition,
major terrestrial transport paths should have uninterrupted 5G coverage.
Where’s the Return?
To make their 5G services viable and profitable, Europe’s
operators are looking beyond their core telco business in order to unlock new
revenue streams. By far the biggest use-case is enhanced mobile broadband,
including 4K streaming.
On the enterprise side, the shift in workloads from
centralised cloud to a distributed mobile workforce, as well as new workloads
at the edge, is eyed as an immense opportunity for service providers. These
applications include smart sensors, autonomous vehicles, and real-time
VR/AR—this despite VR and AR headsets and glasses sales declining last year,
according to a CCS Insight report. The research firm does expect sales to pick
up in 2019 and to accelerate as more standalone or wireless mixed reality gear
comes to market (go2sm.com/ccsinsight, registration required).
5G will need to provide the foundation for comprehensive
services that solve major challenges for applications like self-driving
vehicles, drones, public safety systems, and smart grids. Network slicing will
virtualise a single network to support a wide array of new services that are
not possible with today’s best-effort mobile networks.
While the new 5G "killer app" may not yet be
defined, mobile operators will likely treat the network itself as a new revenue
resource, perhaps selling a slice of their 5G network to another provider to
deploy different services and offer a service level agreement to guarantee a
minimum speed and low latency.
Despite the excitement surrounding 5G, initial consumer
uptake will be limited, MiDIA Research’s Pescatore says. "Telcos need to
generate revenue in order to recoup the investment in 5G with the acquisition
of spectrum and rolling out a network. Therefore, expect other converged telcos
[like BT and including Deutsche Telekom and Orange] to focus on specific
verticals such as broadcast and media."
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