Chinese multinational conglomerate Huawei has identified video as a new opportunity for mobile operators to monetize their services. The Chinese smartphone maker believes that video represents a new cash cow for operators with the entertainment market opportunity estimated at $650m worldwide by 2020. President of Huawei’s products and solutions, Ryan Ding, maintained that operators in various markets are already making the move to monetize video services, such as high-definition streaming of sport events.
He pointed to South Korean operator LG who are delivering and providing 2K live streaming of football and baseball games to smartphone customers who are paying extra for the high-quality real-time content LG are providing. Huawei already works with a number of mobile operators in China in an attempt to reduce the buffering on existing 4G networks. According to Ding, ‘Gamers are happy to pay for lower latency.’
Huawei’s X Lab Insights have also forecasted that it expects the video communications segment to be at $18 billion by 2020 – and use of video in vertical industries at $350 billion. However, it’s in the area of video surveillance that has been identified as the biggest vertical segment. In order to provide some context in relation to the scale in China, Beijing alone has 1.3m CCTV cameras. China Mobile runs a program in Zhenjiang province which monitors everything from villages to restaurant kitchens to factories, with average revenue of $350 per-camera each year.
Ding stated that he believes operators in China are better positioned to deploy video platforms in order to move content to CDNs than their rivals in Europe which boast older legacy systems. In addition he suggested that the bottleneck in monetizing video is generally not doing network optimization, but rather the OSS/BSS integration. Ding added: “Operators in China can optimize the video experience in a shorter time, while in Europe it could take 12 to 18 months.”
The success of video will be a key element in operators’ overall revenue growth over the next five years. X Labs Insights forecasts telco revenue to increase between 3% and 5% annually until 2021, when it will reach $1.3 trillion.