How Big Will Video Telephony Be? And For Whom?

Analysts at ABI Research (News - Alert) estimate revenue from mobile video services will top $2 billion worldwide in 2013, driven by multiple sources including video telephony, video messaging, video sharing and video-on-demand. On a global basis that isn't much revenue, since annual service provider revenues alone, irrespective of application provider revenue, is around $1 trillion. 

But mobile video is among various new revenue streams operators and industry observers consider important for future revenue growth. Indeed, “video services revenue will only amount to about $121 million this year,” said ABI Research senior analyst Mark Beccue.

Video telephony, video messaging and video-on-demand will account for the lion’s share, Beccue said. It isn't clear where most of the revenue ultimately will be earned, no matter what the best analysts now predict. 

The lingering global recession may affect consumption patterns, especially in industrialized nations, Beccue noted. 

Beyond that, it isn't so clear how much revenue will be earned directly by third party application providers, compared to what mobile service providers might garner. Apple's Facetime, for example, does not require any particular operator involvement, and neither does Skype (News - Alert). 

There remains much room for creation of business models that could powerfully affect the size of potential revenue and the distribution of that revenue among ecosystem participants. Beccue said mobile service providers "mustn’t settle for the role of undifferentiated mobile ISPs that manage dumb pipes." An apt observation, to be sure, but it will remain difficult for service providers to create a meaningful role so long as users can conduct video telephony sessions on an over-the-top basis. 

Indeed, a recent survey by Amdocs (News - Alert) of 25 emerging-market service providers showed 67 percent believe they will be "enablers" of services provided by third parties, while 33 percent believe they will be providers of the actual end-user applications on a direct basis. Some providers will create and sell retail services under their own brand names. 

But it appears the vast majority think they will provide services to third parties who actually retail the applications. In that event, revenue sharing will be key, as access providers partner with handset and application providers who will create and support the actual services. If that is the case, there might be less revenue than many believe for video telephony services.