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February 01, 2013

OTT Revenues to More than Double by 2020

By Ashok Bindra, TMCnet Contributor

Market research firm IDATE’s latest study, “Future of Communication 2020: Telco & OTT Communication” forecasts that by 2020 in the USA and EU combined over the top (OTT) communication service revenues will increase to €15 (US $20.47) billion from €7 (US $9.55) billion in 2012. Despite this growth, it only accounts for six percent of total communication service revenues, according to the report.

However, findings show that telcos will account for the remaining 94 percent. Nevertheless, the total market will decline, mainly due to the telcos’ devaluation of the market, rather than the OTTs taking their revenues.

According to IDATE, many communication service providers are aggregating and providing several communication types to the market. For example, Facebook (News - Alert) is primarily a social network but also offers voice, messaging and file sharing services. Similarly, the operators traditionally offer voice and messaging as their core product, but are now looking to diversify into file sharing too either through cloud products or the GSMA (News - Alert)-led RCSe (rich communication suite enhanced) initiative, marketed as ‘joyn’.

To remain competitive in the market, the IDATE report suggests that the telcos are now looking to offer more than simply voice and messaging. To achieve that goal, they are using three main ways. First is through providing their own OTT communication service (such as Telefonica (News - Alert) with their TU Me app and Orange with their Libon app). Second is via partnering with OTT communication service providers (such as Verizon and H3G UK with Skype (News - Alert) and H3G HK with WhatsApp), and thirdly joining the GSMA-led ‘joyn’ initiative, launched by the three principle operators in Spain (Orange, Telefonica and Vodafone (News - Alert)).

In conclusion, this information highlights that the need for telcos to offer more than the traditional voice and messaging service is largely due to the commoditization of such services. Likewise, mobile data and Wi-Fi are driving OTT  video communications is another direction.

Edited by Jamie Epstein
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