The news from the Indian pavilion at the recently concluded Mobile World Congress (MWC) at Barcelona, Spain is that the mobile operators are exasperated at the emergence of unregulated over-the-top (OTT) players such as WhatsApp that are eating in to their network capacity and earning more value than they themselves could derive. Some CEOs even went to the extent of jurisdictional regulation over the OTT players! Instead of complaining, it is time that the telcos join the bandwagon of the internet players and try to leverage the open internet platform as much as they can. In this article, we specifically analyse the broadcasting market and how it is changing due to the evolution of online media services.
The traditional broadcasting industry value chain is very long. On one hand, we have cable TV broadcasting systems that have broadcasters > multi system operators>local cable operators>subscribers. On the other hand, there is broadcasters>DTH providers> subscribers, which is a tad shorter. However, in both the cases broadcasters are at the mercy of the intermediaries for subscriber management and associated revenue share.
There is also one more model that was attempted by the telcos: broadcasters>internet protocol television (IP TV) providers>consumers. However, the technology of IPTV was so complex and available on only select devices such as PCs, laptops or smart TVs connected to the internet based on subscription that it failed miserably, especially in India. As is true with any closed walled-garden system, the intermediaries?the MSOs, DTH providers and IP TV providers, in the above cases control the subscriptions and hence the revenue share of the broadcasters.
With the availability of pluggable devices such as Google?s Chromecast and the associated opening up of Cast Software Development Kit (SDK), there is a disruptive opportunity for the broadcasters to embrace online OTT service. By providing broadcast content as free OTT service much like messaging applications, and enabling easy viewing on large dumb TV through a Cast application, subscribers can look forward to days when they don?t have to subscribe for any TV broadcasting service!
There are already signs of this phenomenon. The UK-based broadcaster Mediaset garnered about 100,000 subscribers within the first week of launching its OTT service in Italy. In India, there are online streaming services such as BoxTV and NexGTV that have been offering shows, movies and TV programmes. These firms are expected to build apps for Google?s Chromecast that enable much easy viewing of the content on television sets. Since advertising contributes to bulk of the broadcasting services revenue, the OTT service can be made absolutely free, with broadcasters and OTT providers cross-subsidising through innovative advertisement based monetisation models.
However, the hidden element in the above is the need for homes to have Wi-Fi/ digital subscriber line (DSL) based broadband connectivity for the video content to be pushed on to pluggable devices such as Chromecast. This provides enormous opportunities for the cribbing telcos. It is to be noted that we have just about 45 million landlines compared to 900 million mobile subscriptions, with more than 90% being provided by government operators.
The above market changes indicate that landline is not dead as yet. The telcos should use these as an opportunity to sell reliable high-bandwidth DSL based landline connectivity to subscribers. The telcos also should partner with broadcasters or online streaming media service providers to provide bundled broadcasting service. It is time that the DTH providers and MSOs, especially in urban areas realise this looming threat and jump on to the bandwagon as well.
Let us not advocate regulation of OTTs! It is time that the communication and broadcasting industries works together to lessen the regulatory over heads for better use of rapidly evolving information and communication technologies to advantage!
Krishna Kishore & V Sridhar
The writers are at Sasken Communication Technologies
