Jonathan Haysom, Vice President, Home Product Marketing, Etisalat
Malek Hammoud, Executive Director, Strategy & Business Development, Zain Group
Christian Bartosch, Associate Director, Boston Consulting Group Middle East
Maaz Sheikh, Co-founder & CEO of Starz Play Arabia
Carlos Tibi, Founder & CEO, icflix
DB: How can telcos and OTT players collaborate better than the current scenario?
Christian Bartosch: An approach to consider is to create two-sided business model, which will allow the operator to invest in the capacity and speed required to deliver good services to customers. Further, OTTs can work closely with operators to enable traffic management and content caching, rather than delivering mostly encrypted content to the operator’s network.
Jonathan Haysom: OTT providers today are looking for telco partners with scale, reach, reliability as well as best-in-class networks to ensure their products are usable and enjoyable. We actively seek out partners from the OTT world that provide opportunities for mutual growth.
Some of our partners want to be brought directly into our eLife TV ecosystem to leverage our reach and become part of our award winning content line-up while some partners are hosted at our data centres to ensure world class streaming performance for their end users. On top of that we also have our own OTT service, eLifeOn, which extends our eLife TV experience to mobiles, tablets and TVs across the UAE. For partners on our TV platform who don’t have OTT reach we are able to deliver that for them via this service.
Malek Hammoud: Today, digital disruption is a reality that transforms customers’ needs and preferences in light speed. People are moving towards more unified products and service offerings across multiple digital verticals where quality and speed becomes the ultimate factor of choice. Given this fact, neither the telcos nor the OTT players can stay long without the other. In this context, I can say there is a good traction in telco & OTT collaboration, yet it is still far from being sufficient to maximise the value for all stakeholders.
Carlos Tibi: OTT players have come to stay and telcos have started to realise that partnering is the way forward. The first step is to measure and understand the customers. Having this information will allow telcos to make better decisions about improving an existing service or creating a new one. Network operators need to adopt big data in order to continue in the data-driven decision era. Telcos will need to simplify their product line-ups, digitise their networks and operations and consolidate to gain scale and capabilities. Telcos also need to stay one step ahead and embrace technological innovations and digital trends to stay ahead in this competitive and fast-moving market.
Maaz Sheikh: The relationship between telcos and OTTs is a very natural one. Telcos provide three things to this relationship - the infrastructure for delivery, the billing capability, and they provide a brand and trusted relationship. The only thing they lack is a service with content and that’s where the OTT operator comes in. We work with 14 telecom operators in the MENA region, so we are seeing very strong opportunities to work with them. And we see the telcos delivering the right things in terms of all those three capabilities.
DB: Can we look forward to a unified platform with offerings from various OTT players offered as a customisable service by telco operators? Will OTT players be okay to partner with other OTT players for this?
Bartosch: We are seeing this in place to some extent from content delivery network (CDN) providers such as Akamai. However, the larger tier 1 OTTs such as Amazon, Google, Facebook and Netflix are aiming towards control of the e2e traffic to ensure a competitive advantage rather than cooperating with competition.
Haysom: Customers seek out simplicity as lives become busier and more complex. Multiple apps aren’t conducive to simplicity. As an aggregator with our eLife TV service we are in a unique position to bring as many content partners on-board to deliver a holistic and simple entertainment platform for subscribers. We are able to deliver premium entertainment services on a single IPTV platform already and we aim to continue to simplify and delight our customers with this approach in our OTT environment.
Hammoud: Given the existing competition and fragmentation of the market for OTT players, I see it very unlikely to happen in the short term. Yet, I believe consolidation will be inevitable around OTT products and services under unified platforms due to consistent changes in technology (e.g blockchain, and Web 3.0) and evolving customer needs and preferences. Undoubtedly, telecom operators need significant transformation to become the optimum resort for this unification.
Sheikh: Yes, I think OTT players should be open to doing this because this is the right thing for the consumer. Some telecom operators are already doing that. If you look at E-life service for example, in the UAE, it offers a transactional video-on-demand service, but then it also offers StarzPlay on the same platform, so the customer can choose between Etisalat’s VoD services, or StarzPlay. So, Etisalat is already doing this and I think we will see more and more of such offerings in the coming times.
Tibi: We are slowly seeing this being adopted in the region, for instance Ooredoo has launched the region’s first 4K TV service into a single STB offering apps, on-demand services and live TV via the company’s fibre network and in-home Wi-Fi to multiple screens, thus giving customers a wider choice of content to choose from.
DB: What are three main areas in which OTT players seek cooperation from telcos and what are three main areas in which telcos seek cooperation from OTT players?
Bartosch: In terms of OTT players, the control for Quality of Service (QoS) for services such as speed and latency. Provision of a flat bandwidth of pricing to stimulate the consumption of video – possibly as a wholesale deal where OTTs would include the bandwidth cost into customers’ bill (e.g. Netflix) – and net neutrality or fair access for all OTTs. Regarding telcos, the provision of revenue share in exchange for providing QoS base bandwidth, ability to shape traffic and act as a single stop shop to customers, including the billing relationship.
Haysom: OTT players need a world class carrier to ensure their product is the best for their end users. Telcos with superior networks attract customers due to the high performance and wide reach. Telcos can also simplify the payment processes for OTTs via direct carrier billing enabling them to focus purely on delivering their content in their ecosystem and let the carrier partner take care of the network and billing.
Hammoud: In my opinion, OTT players’ primary needs from the telcos are access quality, customer data and operational support (e.g. direct operator billing). On the other hand, telecom operators’ basic needs from OTTs are differentiation in products and services, better monetisation of existing data propositions and new revenue streams.
Sheikh: The type of collaboration we are looking for is more on the marketing side. Telcos are the touch-points to the customers, so they can access the customers much more easily than we can. So, we rely heavily on them for marketing the service to their customers.
Tibi: OTT services become the video-on-demand arm for the telecom operators and OTT services can leverage telco infrastructure for localised billing purposes. This gives telecom operators another opportunity to increase the ARPU for data consumption and make legal streaming available to a wide audience.
DB: Are there too many OTT players in the market? If so, is this a bad situation?
Bartosch: We believe that the OTT ecosystem differs from the telco ecosystem, in that it lives on rapid innovation, agility and trial and error. A healthy OTT ecosystem requires many players to preserve this agility. From a traffic and content perspective, 60% of the fixed and mobile access traffic in most markets comes from the top 10 OTTs, such as Google, Facebook and Netflix, hence a few players are dominating the market. Many OTT players help telcos to avoid dependence of a few “super” OTTs.
Haysom: It’s always good to have more choices for customers and as a telco it gives us the ability to see what’s working and what’s not in the growing local OTT scene. We have a very strong OTT proposition with eLife ON and our customer are already engaging with the service, as other OTTs grow in popularity we are able to grow with them either organically through mobile data plans or together as partners in a B2B2C mode.
Hammoud: Too many OTT players mean a wide range of choices for the customers. The wisdom of digital market is that it’s brutally honest in allowing only the best ones to survive. We are always looking for the best value for the customer and try to establish the right partnerships with the OTTs that we fully believe can deliver this promise. Zain’s recent engagements in media, advertising and shared economy services are very nice examples to this.
Tibi: The arrival of new OTT players in the market has actually helped raise more awareness and curiosity of Icflix amongst viewers. Also, with the rise of streaming services in the region, audiences will now be more inclined to subscribe to multiple streaming services as this will give them a wider choice of content to choose from, making entertainment options for the entire family limitless.
DB: An ideal world would mean not having to subscribe to multiple services, and getting an amazing experience irrespective of the device and the geographical region we are in, and according to our tastes. How far have we made the progress towards that yet?
Bartosch: If one considers subscribers in a country like Finland with a flat rate data plan who have a Netflix subscription, then these customers are relatively close to an ideal state. On top, many operators offer direct charging of Google Playstore content, which could be extended to a one-stop shop for Android device users. However, as Apple has shown, owning of customer billing relationship is also key for OTT players. Telcos will therefore have a hard time becoming the one-stop-shop, the risk rather is that Google will become a global mobile virtual network operator (MVNO) with soft SIMs and hence able to disintermediate telcos.
Haysom: On the ability to consume content on-the-go across the UAE, we have that covered. Outside the UAE however this is still challenging. The studios and rights holders execute different deals across regions and to navigate that and cut deals to ensure a consistent product can be challenging. For carriers with good subscriber reach in other parts of the world it makes the job a little easier; just looking at the top global OTT providers for example, their experience and catalogue varies widely depending on the country.
Hammoud: This is a very nice description of an ideal world where both telcos and the OTT players would love to see it happening. However, it requires not only the willingness from Telcos or OTT players but also the full-fledged compliance with state related external factors like regulatory environment and tax regimes that vary across the countries. Unfortunately, it is very early to say that we made a significant progress on this so far.
Tibi: Customers will always have the need to subscribe to multiple services since OTT players will offer exclusive and original content to differentiate them within a competitive streaming TV market.
DB: The experience and expertise of OTT and the infrastructure of telcos can merge to create excellence in media delivery- what’s hindering it so far then?
Bartosch: In mobile networks, one of the hindrances is the technical architecture of existing mobile networks with tunnelling between packet core and device. Another issue is the competition for the customers’ awareness and interest, where OTT and telcos are increasingly fighting for the advertising revenue.
Haysom: Even beyond our fibre reach we are investing in a dedicated “Fixed LTE” network to ensure even those in the remotest areas in the UAE have access to quality broadband. We take pride in our service delivery and are proactively monitoring down to the OTT streaming service level to ensure delivery is as good as it can be. Etisalat invests in content delivery networks (CDNs) as well as large caching infrastructure to bring the content as close to the subscriber as possible to boost performance. Excellence in media delivery is progressive and we already employ a proactive mind-set for our subscribers across the UAE.
Hammoud: Nothing. This is indeed what we have done in Zain by establishing the JV company with iflix to bring the most innovative VOD platform in the Middle East. In my opinion, telecom operators consider digital verticals beyond standard partnership models where the value is quite minimal. The strategic question for the telecom operators should be “how can we increase our existing in a specific digital vertical value chain through utilisation of my existing assets and capabilities?” This will help the telecom players to think differently and will fasten the pace of transforming them from traditional telco to complete digital services provider.
Tibi: Every operator in the region is different, with different environments, complexities, expectations and ambitions. Operators want to offer diversified products and services but are sometimes reluctant to collaborate with OTT players and third parties.
Sheikh: The industry is still in its infancy. Two years ago, there was a lot of scepticism in the market that OTT wouldn’t be successful. Now, you see players like StarzPlay and Netflix that are doing extremely well in the region. So, you just have to give it another two or three years before the industry starts to develop. If you look at the traditional broadcast pay TV industry, it’s 25-30 years old. If you look at the OTT lifecycle, you are in year two, so from our point of view, it has been very successful. We have certainly expedited our subscriber growth projections. But I think it’s going to take another year or two before it becomes a mass product.