Thanks to Jonah Pransky, Manager of Market Insight and Strategy at Amdocs, for sending over this guest post. It focuses on the rather prickly subject of over-the-top (“OTT”) players and how operators can engage with them (and vice versa). It’s a particularly challenging situation especially when one side feels the other isn’t playing fairly.
Over to Jonah:
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It’s hard to miss the increasing number of dating sites, speed dating events and lonely hearts ads in the papers, highlighting the common desire to find ‘the one’. It seems like everyone is trying to find that perfect relationship – a partner to join forces and share future plans with.
And it’s not only romantics who are searching for that special someone. Communications service providers are also on the prowl for the perfect partner, believing they need to pair up with device manufacturers and/or over-the-top (OTT) players to remain competitive. However, many providers are unsure how to do this effectively.
The past year has definitely highlighted some challenges service providers face with regard to revenue management with the arrival and adoption of social messaging services like WhatsApp, BlackBerry Messenger (BBM) and Facebook Messenger. In October 2012, Ovum estimated 14 billion dollars has been lost to OTT players in 2011 alone, which immediately brought OTT players into the limelight as a key consideration in 2012.
Our recent global survey, in collaboration with leading analyst firm Coleman Parkes, looks at the relationships between telecom service providers and OTT players like Google, Netflix and BBC iPlayer. It’s clear this relationship can be strained at times and as the communication market hits saturation, competition for customers’ attention and revenue is intensifying, which we expect to continue into next year. The survey specifically explored how service providers, device manufacturers and OTT players feel about the concept of partnering.
So like the hunt for the perfect soulmate, service providers find themselves searching for the perfect partnership. 58 percent of service providers believe the communications market will consolidate in the future and that only players that partner will succeed. Service providers, OTT players and device manufacturers will all seek to own the vital customer relationship within the next couple of years and the majority in all three groups understand they’ll need to form smart partnerships to achieve that aim.
So now it’s time to pop the big question: how can service providers ensure they get into successful, long lasting partnerships?
Now creating a successful relationship is no mean feat, and service providers, OTT players and device manufactures must ensure they create win-win partnerships that work for both involved parties. Like any solid, stable relationship, compromise and sharing are key. For instance, our survey found the desire for increased revenues and cost savings to be a common sentiment.
Before picking out a ‘mate,’ service providers must consider their goals carefully, making sure they choose a partner who will help reach a successful outcome. Our survey cited that a seamless customer experience is hugely important for both device manufacturers and OTT players. This highlights that service providers with efficient CRM strategies in place may have their pick of partners.
Sharing is caring
It’s a common fact that young love often finds itself challenged when one person hides away assets, namely money, property or mum’s homemade cake.
Like those young couples learning how to survive as a twosome, service providers will have to learn how to share if they want their partnerships to thrive. The survey found that the three groups are willing to offer and expose their core assets to achieve partnering goals. While 74 percent of OTT players and 73 percent of device makers were willing to expose and share their core assets, perhaps most surprising (and interesting), 56 percent of service providers are willing to do so. This kind of sharing will be vital to creating those win-win relationships.
Having analysed the results of the survey, we predict that in 2013, service providers will fully embrace the partnership play, joining forces with OTTs, developers and even other service providers to bring innovation and brand differentiation to the market as quickly as possible. This will require efficient partner management, novel business models and flexibility. 68 percent of service providers say that OTT players bring innovation to the industry. And yet, 42 percent of service providers said they could offer any service an OTT player can deliver – but better.
What will you bring to the relationship?
We’re always told to play to our strengths, and service providers need to do just that in order to create a successful partnership.
OTT players seemed to agree with what service providers believed to be the most important assets to a partnership: brand strength, network quality and customer data. When working in partnership, attempting to control the value of consensus assets will likely lead to success, but the value proposition of other service provider assets needs to be developed. Advanced IT systems allow service providers to leverage key assets, including network quality of service (QoS) and customer data, in order to turn them into revenue. The ability to combine charging and policy will also enable QoS-based charging on behalf of partners.
A surprising result from the survey shows that 70 percent of service providers view OTT players as potential partners, rather than a threat. Such partnerships are already happening in the market and will only continue. For example, the Telia/Spotify partnership, creating an exclusive music service on Telia’s TV set-top box which can also be enjoyed via mobile devices. Reliance also teamed up with WhatsApp to offer unlimited prepaid use of WhatsApp together with Facebook. See, it’s possible!
It can be just like the fairy tales…
The key to a healthy, happy relationship is communication, right? Wrong. Successful partnerships require systems and processes in place to make partnering lucrative and effective. Open partner management systems allow partners to get on board quickly and to share revenue. The right solutions are paramount but alone they’re just not enough. Best of breed solutions should be married to a good strategy to enable service providers to attract and find the right partners, to settle down and to live happily ever after.
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Thank you very much for taking the time to write Jonah!