INSIGHT: How should mobile operators respond to the growth of social mobile video apps like Periscope?

Social mobile video apps such as Periscope and Meerkat are hot right now.

Social mobile video apps such as Periscope and Meerkat are hot right now.

Twitter-owned Periscope revealed this month that it has created 10 million accounts since launching in March and that 1.8 million people use the service daily.

Meerkat said in March that it had 2 million users.

The mobile operator community can view the growth of mobile video as both a burden and an opportunity. These services let you watch live video streams or broadcast your own stream on and from your mobile phone, so they place a heavy traffic load on the network.

But they have also led to more partnerships between operators and Internet, mobile app, and digital media companies.

In addition to releasing KPIs around its user base, Periscope disclosed that its users are viewing the equivalent of 40 years of content – almost 12 minutes per user – per day.

Even with a user base of just 1.8 million people this volume of traffic is significant, representing several petabytes of data per month.

Ovum is producing some analysis around Periscope, modeling how much incremental revenue operators would need to generate to neutralise the impact of carrying the Periscope traffic.

Even this single mobile video service, in the early stages of its evolution, is having a tangible effect.

As mobile video becomes more mainstream in social media, and broadcasters and digital media firms develop more mobile video offerings, mobile carriers must formulate strategies rather than merely observing and reacting to the phenomenon.

The last two to three years have seen rapid growth in the number of OTT-telco partnerships, and video has been the fastest-growing service category as operators seek to add value to their LTE market propositions.

Telcos are probably already approaching companies such as Meerkat and Periscope for partnership agreements. Negotiations will likely focus on in-market exclusivity and how much video traffic the operator is prepared to zero-rate.

In the past mobile operators have sought (unsuccessfully) to negotiate revenue-sharing agreements with Internet companies.

Few of these early-stage mobile video firms have implemented strategies for monetising their services, but even if they did – and the most likely route would be via advertising – in reality they would not generate enough revenue to make the opportunity interesting for operators.

Ovum estimates that if Periscope was, for example, to introduce advertising, it would only generate US$10–20 million in annualised revenues from its 1.8 million users.

UK mobile operator EE has taken the bold step of building its own mobile video service, although its product, called Skeegle, is actually a camera with embedded LTE capability rather than just an application.

Skeegle is more of a competitor to the GoPro action camera than to services such as Periscope, although EE has developed its own app for the service.

In practice, partnership models or the launch of products and services such as Skeegle are unlikely to move the operator revenue needle to any significant degree.

Operators can derive the most benefit from the growth of mobile video by making it easy and satisfying for their customers to use such services and by continuing to transition to tiered pricing models.

As soon as operators have confidence in – and can see evidence of – their ability to move customers up through the usage caps, their strategies for mobile video will fall into place.

Part of this will involve helping customers understand how much their viewing habits are costing them in terms of data and price, real-time alerts around usage, and simple mechanisms for allowing customers to buy more data by the day, by the megabyte, or by the application.

Making data roaming more affordable will also be important. Social mobile video services are perfect for holidaymakers wanting to share their experiences with friends or family back home, but if they are vacationing abroad, data roaming prices makes mobile video much too expensive to use.

By Mark Newman - Research Analyst, Ovum

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