Riding on the public’s burgeoning love affair with mobile video, Turkcell managed to grow its TV+ subscriber base to 1 million in just two years. Moving forward, Turkey’s leading telco has great confidence in video as a new growth catalyst and CMO Ismail Butun explains why.
It’s no secret that telcos have suffered stagnant growth and declining margins over the past few years. To compete against OTT players and stay relevant to subscribers’ changing lifestyles, they’re invariably seeking new avenues of growth. Turkcell’s Butun, who had worked in FMCG for 16 years before joining Turkcell, is optimistic, believing now to be a time of opportunity for telcos, “When you look in from the outside, you can see there's a lot of opportunity and we’re so lucky to be in this industry.” And one big opportunity, he says, is mobile video.
Like any CXO, Butun keeps a close eye on industry trends and is particularly excited about what he’s seeing with mobile data. According to StatCounter, people browsed more on mobile devices than on PCs for the first time in November 2016, marking what Butun describes as “a historic moment.” This is a trend that we can expect to continue ─ the Visual Networking Index, for example, holds that global mobile data traffic will increase sevenfold between 2016 and 2021.
“Mobile video traffic accounted for 60 percent of total mobile data traffic in 2016 and over 78 percent of the world’s mobile data traffic will be video by 2021,” says Butun. “As Turkcell is shifting from being a network provider to a customer experience provider, mobile and video is our main focus.”
When it comes to video, he believes that Turkcell holds a unique position based on its infrastructure and customer data. The telco serves 68.9 million subscribers people across nine countries, and is the leading mobile operator in Turkey with a subscriber base of 34 million. In terms of market positioning, Turkcell is a converged operator that delivers fixed and mobile broadband, TV, and music services. According to Butun, “We have the capability to provide end-to-end and integrated services. So we see ourselves standing in the middle of a perfect storm.” The operator had made fiber available to 2.5 million homes as of July 2016, and ─ after the Health Ministry ─ holds more customer data than any other domestic company.
Turkcell launched its TV platform towards the end of 2014. It hit the market with two product forms – IPTV for household users and an OTT product for mobile users, both available in various quad-play packages.
Service performance was solid from the start, attracting 560,000 subscribers in the first year. Then two more milestones were reached in 2016 – April saw the launch of Turkcell’s 4.5G network, which was followed by the introduction of 4K streaming services two months later.
Added to the tech came richer content in the shape of the English Premier League and NBA, which were rolled out on the TV platform in September 2016. In fact, the operator added more than 50 HD channels last year, including Animal planet, Discovery, and Disney, as well as the two sports favorites. “Our content is really much richer than last year,” acknowledges Butun. “That gave us a good position in the market place. And 4K, with superior network experience thanks to the 4.5G network, has really paid off.” The figures agree: By the end of 2016, Turkcell had attracted over 1 million TV subscribers. “On the IPTV side, we have 360,000 subscribers, and on OTT side we have 700,000.”
Turkcell’s TV+ service is cloud-based and supports timeshift and VoD. The offering is personalized and interactive, as viewers can share what they like and dislike. But, Butun believes that the biggest strength of TV+ is the seamless multi-screen experience, “If you’re an IPTV subscriber and start a movie or football game on TV, you can turn on your tablet or use your mobile phone to continue watching if you go out.” The offering also provides four streaming channels, which really adds value to customer experience. Moreover, with data bundled into packages, subscribers don’t face bill shocks, “There are no big surprises, only a good surprise on the experience side,” says Butun.
He pinpoints the two main success factors in Turkcell’s TV strategy, “Rich content and a really good infrastructure.” Though these are not new concepts, execution is the factor that sets Turkcell’s TV+ offering apart from rival products. On a standard OTT TV platform, you normally have VoD for movies and TV shows. But on Turkcell’s platform, customers can choose from more “than 120 live channels, covering all national channels and most local TV channels, in addition to VoD services,” explains Butun.
When it comes to networks, he observes that, “3G is good, 4G is good too. But when we launched 4.5G [in 2016], it really made a difference.” Having acquired 47 percent of the total spectrum available in the country, Turkcell also boasts the fastest mobile and fixed Internet in Turkey, with the Ookla 2016 speed awards recording a download speed of 375 Mbps on its mobile network. “We provide the fastest mobile internet connection in the world,” says Butun. “We’re proud of our infrastructure. That's important because rich content won’t be successful if it’s always buffering.”
In 2014, the peak download speed recorded was 1.6 Gbps. By 2016, it had jumped up by almost 18 times to reach 24 Gbps, which is expected to rise to 29 Gbps by the end of 2017. The amount of TV consumed is also on the up ─ before LTE, it was around 7 minutes a day per subscriber, but now it’s 40 minutes. “It's huge, huge traffic,” states Butun. “That was our goal, and we reached it earlier than planned”
As a result, he’s bullish about subscriber numbers, “In Turkey there are 21 million households and 80 million people. At the moment, we have 1 million subscribers. So, there’s still a big space to move forwards.” Without giving specific numbers on growth forecasts, Butun hints that Turkcell may adjust its goals upwards because current growth is already exceeding targets.
However, the telco knows that it needs to run the right business model, because the TV business is very costly due to content. “To justify investing in content, you have to establish a very sustainable business model. You have to find middle price points with different packages for a varied content portfolio to increase ARPU.”
To consistently deliver the highest quality video streaming service, the telco is looking to upgrade from HD to UHD in the near future, which is where Huawei comes in, “Huawei is both our infrastructure and TV platform provider,” states Butun. “It develops new features for IPTV and OTT every month. And we expect this to get even faster.” Other key technology areas the telco is working on include CDN and video compression.
For Butun however, the whole TV business isn’t about technology per se, “Whatever we do in the next five years, whatever new technologies come, we should never forget that the real connections we want to make is with people.”