Mobile video represents 70% of mobile traffic and the majority of global internet traffic. No surprise, consumers are engaging with content and mobile in new ways which should stoke the cycles of innovation we have experienced for the last 30 years. But will the infatuation with all things app-based stymie the natural progression of innovation for mobile video? The answer is surprisingly, very likely.
This requires a change in the go-to-market strategy for every market participant. Apple is well on that way through Apple TV in their closed system, providing a holistic user experience while disintermediating all the content owners. The problem with Apple’s solution is that it works only on Apple devices and relies on an app. The resistance of large media properties and aggregation entities like Netflix is natural from their point of view and probably unavoidable since a significant part of the value proposition is their unique content and branded user experience. While a Netflix is large enough to resist this trend, the smaller players will probably be subsumed in the holistic user experience and become pure content providers. What is really needed is a cross-platform solution that works appless, meaning the media experience software is part of the OS or at least always active in the background. This dramatically enhances the user experience, especially when implemented holistically.
At the same time, there are competing interests at stake. Companies that differentiate on content and user experience will have a tough time swallowing that they should have a diminished role in the mind of the consumer. The easiest will be the established TV players. Disney’s ABC, Comcast’s NBC, 21st Century’s Fox and CBS will all their additional channels are used to being part of someone else’s (the cable company’s) user experience. That’s why they were the first to sign up for Apple TV. Netflix and Amazon Prime will have a much harder time to put their content into someone else’s user experience and lose a very important (to them) branding and differentiation position. To think Apple would put an appless experience for anyone but their own service on iOS is just ludicrous. Apple wants to make their TV app a success. Apple thinks they can do it better than anyone else, which is often the correct assumption. With Android, an appless experience does not need Google’s cooperation as anyone can build a custom UI and create the tight user integration needed to make this successful new user experience.
We are making significant progress in the area of expanding wireless network speed and capacity with the arrival of massive MIMO antennas which vastly increase available download speeds to consumers. Furthermore, the arrival of 5G will reset the competitive environment again – the same way the big technology transitions from 2G to 3G did, and 3G to 4G did. What is different this time around is that AT&T, T-Mobile and Sprint remember what happened in the last three network evolutions: Verizon dashed ahead – sometimes with pre-standard solutions – quickly built out a large network with the next generation technology and created a meaningful network differentiation that was described as providing a superior consumer experience. To prevent any one of the big mobile operators from gaining a competitive edge, the entire mindset of the industry is on rolling out 5G as quickly as possible because a superior network experience has become the new table stakes for competing in the U.S. The capacity advances will likely lead to another proliferation of unlimited data plans because providing bandwidth in densely populated areas will become more manageable and affordable.
The coming tsunami of 5G networks will enable mobile operators to transform the consumer video experience across all of our devices. Forward looking operators, regardless if they are cable, satellite or OTT, will similarly need to transition to offering integrated, experience-based offerings rather than just selling rate plans and devices. The current competitive climate has been characterized by commoditization and unimaginative price cuts. Wireless is more affordable than ever but market research indicates that most customers would rather have a better experience than see another $5 or $10 shaved off an already low price point. What consumers want are curated, and differentiated user experiences. Customers demand they be delighted with the entire experience of engaging with their online content,
Operators, no matter if they are mobile, cable, or satellite, are well positioned to offer a satisfying consumer video experience if the consumer isn’t buried in a maze of dozens of applications that must be dealt with to have the experience. Operators need to step up and transform themselves into providers that offer a total customer experience. Having a great network is table stakes. And offering competent and flexible customer service is pretty much the price of admission to the marketplace. So how do the mobile operators differentiate themselves? We are in the midst of this transformation and over the next few years, the losers and the winners will emerge. The losers in this seminal market transformation will market the old-school device and rate plans, whereas the winners will have transitioned to selling integrated experiences.
Roger Entner is the Founder and Analyst at Recon Analytics. He received an Honorary Doctor of Science from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner.