What, precisely, can or should the U.S. cable industry do about mobile video? The answer partly depends on what “mobile video” is deemed to include.
Cable operators and other video service providers might argue that features allowing consumers to view some of the content purchased as part of their video subscriptions on devices such as tablets and smartphones, is not the bigger problem.
Instead, they might worry more about “non-traditional” forms of video using different business models, content formats, retail packaging and “direct to mobile” or “over the top” delivery.
CableLabs thinks part of the answer is to have a Silicon Valley-based research center looking at such questions.
There is much at stake. The U.S. cable industry generated $97.6 billion in revenue in 2011, with more than 57 million video customers, according to research firm SNL Kagan. But cable operators are steadily losing market share to telco IPTV (News - Alert) providers, and few see any way to halt the erosion, any more than telcos have been able to stop the leakage of fixed network voice customers to cable operators or mobile alternatives.
Clearly, consumption of mobile video is growing.
Mobile video traffic exceeded 50 percent of total global data traffic for the first time in 2011. And mobile video traffic was 52 percent of traffic by the end of 2011.
Mobile video will grow at a compound annual growth rate of 90 percent between 2011 and 2016, the highest growth rate of any mobile application category, according to Cisco (News - Alert).
Of the 10.8 exabytes per month crossing the mobile network by 2016, 7.6 exabytes will be due to video.
But it isn’t merely the existence of new ways of consuming online or “over the top” video; it is potential new business models, possibly using new forms of content.
And it might be “mobile” forms of YouTube that illustrate the challenge, more than “over the top” Netflix. U.K. mobile operator O2 (News - Alert), for example, used YouTube as the foundation of a brand launch, with support for 100 new original channels.
During Google's second quarter 2012 earnings call, Nikesh Arora, Google SVP and Chief Business Officer said, “I think in 2007 it was when newspapers frequently said YouTube (News - Alert) is groping for an effective business model. I think we can declare we found our model.”
Aside from such future threats, market share shifts also are evident in the legacy subscription TV business, where telcos and satellite providers rank among the top-three suppliers, and 66 percent of the top six suppliers are either telcos or satellite providers.
Edited by Brooke Neuman