• Shifts in media consumption are driving significant changes in the content delivery marketplace
• OTT (Over-The-Top) content services such as Netflix are challenging traditional TV and radio providers
• Established players should consider launching their own OTT services
• By offering valued added services to both traditional and emerging players, telcos can capitalize on this competition and return to growth

Strategy consultants Arthur D. Little and Exane BNP Paribas have jointly published ‘How to ride the OTT wave’, the 14th edition of their annual report on the European telecoms and media industry. The report focuses on the intensifying battle between traditional media providers (free-to-air, pay-TV and radio) and OTT (Over-The-Top) content services such as Netflix and Spotify, and looks at the likely market scenarios over the next few years. It predicts that telcos have a key role to play in this battle by offering services to both established and emerging media, with the growing demand for super-fast broadband kick-starting revenues once more.
More than 110 industry executives from 17 countries were interviewed for this report, which can be accessed here:
www.adl.com/TelcoMediaOTT/ Shifts in media consumption driven by the rise in connected devices such as smartphones and tablets are creating a new playing field in content delivery. This has led to traditional TV and radio providers facing growing competition from pure play OTTs, with two-thirds of interviewees believing that pay-TV providers will suffer as a consequence.
However, the report predicts that not even Netflix will have the scale to compete with pay-TV leaders such as Sky or Canal+ for the whole range of their content line-ups. Nevertheless, experts anticipate that the battle between traditional and emerging players will continue to inflate overall content costs.
While there are serious threats to traditional media, particularly for smaller TV channels and low-end pay-TV, established providers could counter OTT competition by partnering with telcos and launching their own OTT services, leveraging key assets such as brand, relationships with content providers, technical skills, and the intimate and long-established relationships they have with their customer bases.
“While in the short-term, we believe that traditional players will be ready to meet the challenge posed by OTTs, a select number of OTTs could reach the scale necessary to compete with pay-TV on premium content,” says Bertrand Grau, Principal at Arthur D. Little in Paris and author of the report. “However, there is a window of opportunity for traditional media to partner with telcos to improve their respective position vs. pure play OTTs.”
Telecoms operators stand to benefit from the rise in online video usage in a number of ways:

• Charging premium rates to customers for faster speeds and/or data traffic
• Monetizing their network assets with global OTTs by charging for guaranteed quality of delivery
• Generating revenues as direct players in online video, music and/or pay-TV, or by partnering with existing players

As such, the report is positive about revenue generation in the telecom industry: “For the first time in three years, optimism has returned to telecom executives across Europe, with a majority expecting the sector to return to revenue growth. We expect a progressive stabilization by 2016, and then a return to growth from 2017 – at a rate of approximately 1% per year,” says Antoine Pradayrol, analyst at Exane BNP Paribas and principal contributor to the report.