Operators Take Content into their Own Hands

Tablets, say the research, are becoming a more favored platform for video viewing, with one in ten tablet users viewing content at least daily.  The key point in the data may not be the frequency, which likely surprises no one, but the demography.  The largest tablet penetration is in the key 25-35 year-olds, the swing point in video viewing behavior.  Change this segment’s habits and you change the whole market picture.

It’s this kind of data that’s driving the network operators in their content monetization projects; this data that made content their highest priority.  Well guess what.  Our spring survey shows that content projects advanced only a little in the last six months even among Tier One providers, while cloud projects literally took off.  I’d talked before about the fact that cloud computing, third among the operators’ monetization priorities two years ago, was taking the lead in execution.  The cloud has now crossed the finish line and most content projects are still stalled in pilot or earlier.

Yesterday, I blogged about how Telstra had invested in a multi-screen startup, and cited it as an example of a disgusted operator sector taking matters into their own hands.  I blogged on Monday about NSN and the chances it might be selling pieces off quickly.  Today, we hear that Belgacom has acquired the rights (non-exclusive, I hear) to NSN’s multi-screen video package and will be developing the stuff itself, as a video integrator.  Not only that, the rumor mill says that there are two other operators who are in the same sort of discussion.  Think about this for a minute.  You’re a network operator.  You want content monetization, and you have a solution offered by another operator and “solutions” offered by network equipment vendors who had to be dragged kicking and screaming to the table.  Who do you buy from?

I really liked NSN’s video positioning and so did operators.  If it becomes widely supported by operator integrators themselves, it’s going to be a tough act to follow.  Furthermore, if operators find out (as they are finding out, so they tell me) that doing this stuff themselves is really not all that difficult (especially compared to making vendors accept the role) then this could change forever the strategic relationship between operator and equipment vendor.  Then, could the enterprise be following behind?

Most network operators self-integrated their cloud approaches, though most still depended in part on a single vendor for the majority of their components, and most still acknowledge a strategic contribution from that vendor.  Most of the Tier One operators are now looking at non-vendor strategies for content.  That leaves only mobile/behavioral opportunity on the table for vendors to leverage if they want to drive the monetization efforts of their customers, and of course reap the benefits.

The interesting thing about this shift is that it might, in the short term, help vendors who had stumbled at the service layer if they play their cards right.  The worst thing you can do in a changing market is shoot at the leading edge and end up substantially behind the duck.  That raises your costs, dilutes your sales focus, and sets up competitors to attack you tactically where you now have less chance of defending.  The problem is that absent any sort of transformation project to support and through which you can create differentiation, you have no chance of sustaining margins.


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