——The future of mobile is video, and the future of video is mobile

The video industry is flourishing and mobile video is in vogue

Along with the development of content, terminals, distribution networks, and the internet, mobile video is increasingly becoming a mainstream service across mobile networks. Content-wise, entertainment videos are now integrated across live TV, UGC, short video, and live streaming, as well as social networking software. The rapid development of mobile video is exemplified by Twitter's 200 million UGC sources and daily view duration totaling 110 years. Communication videos and business videos in a mobile setting are also becoming more and more widespread. Examples include communication between the mobile phone and TV screen, mobile phone to mobile phone, and apps in the surveillance, education, and medical industries. Terminal-wise, the ratio of terminals with 1080p+ screen in new shipment sees an increase from 2015's 36.4% to 50.3%. In terms of the network, LTE population coverage reached 59%, and mobile video experience is tentatively guaranteed. 

It is estimated that by 2021, video will account for 58% of all mobile traffic.

How can operators profit from the explosion of mobile video? 

Global operators are profiting from mobile video business through the following three models:

1. Focusing on video distribution and implementing traffic operations

In terms of traffic operations, an operator's most important asset is the MBB pipeline (mobile networks, CDN, etc.). Operators support end user access of all video categories through the management of tariffs and user experience, receiving the majority of income from data packages. More and more operators are presently strengthening two aspects of operations: 

1) Pipeline experience 2) Tariff adjustment

By strengthening the pipeline experience, operators guarantee end user viewing experience and ensure the smooth transmission of all categories of video services. By adjusting tariffs, operators provide more attractive video service packages. This improves product competitiveness, lowers customer churn rate, and encourages package upgrading. Varying kinds of flexible package design are starting to emerge. For example, T-Mobile US has responded to increased OTT consumption by offering a package with free optimized video streaming (compressed to 480p). The network remains unaffected, while customer demand for video on the go are met. This encourages new customers to switch to T-Mobile, and existing customers to upgrade their package, contributing to a higher ARPU. In proactive cooperation with OTTs such as Youku, China Unicom provides a package with directional data together with OTT subscriptions that promotes consumption of both content and data volume. Proximus Belgium provides a targeted 6-in-1 data package which allows customers to choose an OTT and enjoy free directional data in order to enhance MBB competitiveness and ensure customer loyalty. In addition, the traffic increase from mobile video services will not put high pressure on lightly loaded 4G networks around the world.

2. Developing proprietary videos and implementing platform operations

In terms of platform operations, operators develop their own video brand by building their own platform and integrating video content. This helps them transform their role from pipeline operator to content provider while profiting from content operations. Unlike fixed video business, mobile video services offered by operators do not occupy a pole position in the race for service provision. OTTs like Youtube and Tencent have managed to grow a greater user base since their video service is more attractive relative to operators. 

In response, operators focus more effort on: 

1) equaling the overall entertainment experience OTTs offer, and 

2) differentiating services from those of OTTs. 

Firstly, most of the current mobile video content from operator apps reuses fixed TV or VOD content. However, such content is not suitable for the fragmented viewing behavior that users adopt on the go. The success of OTTs demonstrates how operators should optimize their apps with interactive and social networking functions. With their added advantage of mobile network assets and sales channels, operators can bundle content services and traffic data while creating converged campaigns both online and offline. Thirdly, FMC operators can take advantage of their fixed TV user base to provide converged video communication, mobile device interaction with TVs, and other differentiated services that increase user loyalty and value mining opportunities.

Zhejiang Mobile aggregates multiple OTT content while consolidating 30 000 channel partners to enhance the competitiveness of self-developed video content. Turkcell provides both free mobile video content in its high-value customer service packages and directed traffic for self-developed video services, thus retaining high-value users while encouraging the upgrading of low-value users.

Many small- and medium-sized enterprises are interested in operating their own video brand. The lack of economy of scale, however, means that ROI of the platform and content is difficult to guarantee. In response, a new hosting model is emerging. Some hosting companies help operators cut costs by providing video platforms and content access based on the aggregate user numbers of several operators and diluted production costs. 

3. Integrating industry resources and implementing eco-management operations

In terms of eco-management operations, operators can further extend their business scope based on entertainment video platform capabilities. Some operators venture beyond video aggregation and distribution to copyright management and even content production. Since most operators do not have a copyrighted business or content production experience, many are choosing to acquire this capability. Other operators, in addition to entertainment and communication videos, are extending services toward vertical industries. For example, Elisa Finland is planning to provide video conferencing solutions to small- and medium-sized enterprises. Zhejiang Mobile provides restaurant kitchen and bus live monitoring programs. Some operators such as Jiangxi Mobile, create industry application aggregation platforms with data volume as the anchor that integrates apps in the fields of lifestyle, shopping, transportation, and banking. The double strategy of growing and redirecting data to users as needed achieves commercial success from vertical markets. Free data is given to end users when using vertical app services, where such data could be redeemed for payment credit. These strategies contribute to commercial success from vertical markets. 

With the migration of mobile video services towards mobile scenarios, operators gradually find their own way of video business operations, and realize the commercial potential of mobile video. As Randall Stephenson, CEO of AT&T remarked after the acquisition of Time Warner: “The future of mobile is video, and the future of video is mobile.”