Video monetization & optimization 2014 executive summary

As announced earlier this month, my latest report "Mobile video monetization and optimization 2014" is out.

In 2014, mobile video is a fact of life. It has taken nearly 5 years for the service to transition from novelty to a growing habit that is quickly becoming an everyday occurrence in mature markets. Nearly a quarter of YouTube and Netflix views nowadays are on a tablet or a smartphone. Of course, users predominantly still stream over wifi, but as LTE slowly progresses across markets, users start to take for granted the network capacity to deliver video.

Already, LTE networks start to show signs of weariness as video threatens the infrastructure and the business model of mobile content delivery.

On the regulatory front, with the US appeal court served in January ruling that the FCC had no authority to impose "Open Internet Order" (net neutrality) rules to broadband carriers, there is a wind of hope and fear that blows across the traffic management market.

Almost concurrently, we are seeing initiatives from network operators and OTT alike to find new footings for business models and cooperation / competition.

•       AT&T is experimenting with sponsored data plans,
•       Verizon has bought a CDN,
•       Deutsche Telekom partners with Evernote and Spotify,
•       Orange persists investigating Telco OTT with Libon,
•       Uninor India wants to charge for Facebook,
•       Netflix is trialing tiered pricing,
•       Facebook and Google are hinting at operating wireless networks…

In the meantime, mobile advertising still hasn't delivered on the promises of taking advantage of a hyper targeted, location-aware, contextually relevant service. Privacy concerns are at their highest, with the fires started by Wikileaks and Edward Snowden’ NSA scandals, fanned by “free internet” activists and a misinformed public.

Quality of Experience is a growing trend, from measurement to management and experience assurance is starting to make its appearance, buoyed by a series of vague announcements and launches in the analytics, big data, and network virtualization field.

Legacy (already?!) video optimization vendors see the emergence of smarter, more cost-effective and policy-driven platforms. The technology has not delivered fully on cost reduction, but is being implemented for media inspection, analytics, media policy enforcement and control and lately video centric pricing models and bundles.

With the acquisition of the market leader last year and the merger of the number 2 and 3 in market share at the beginning of this year, we have seen video optimization trials and RFx being delayed in their decision making.

Video optimization in 2014 is a mature market segment. The technology has been deployed in over 200 networks globally.

{Core Analysis} believe that video optimization will continue to be deployed in most networks as a media policy enforcement point and for media analytics.

Mobile video OTT opportunity interview

This is the video interview that was shot at the Monetizing OTT conference I chaired in London last month.



Questions answered:
How has the mobile video market evolved in recent years?
How is OTT changing the value chain and revenue opportunity?
Role of operators in the value chain?
Biggest challenge for operators to develop their own OTT service?
Differences between US & EU markets?

Video monetization and optimization market shares 2014

For those of you, loyal readers who have followed this report, now in its third edition, there will be no surprise as to why monetization is making its appearance in the title and figures so prominently in the analysis and opinions voiced there.

Mobile video optimization was a solution brought forward by web optimization, browsing gateway and mobile video vendors that was positioned as a means to drastically reduce the volume of video transiting through a mobile network. With a combination of lossless (caching, pacing…) techniques aimed first at reducing the inherent waste of delivering videos created for the internet and laptops in a mobile network, the solution evolved towards aggressively reducing video volume through lossy (transcoding, transrating) techniques.

Vendors in this space have evolved their offering from a broad, binary application of the technology, essentially proxying and optimizing all video traffic all the time to a more granular, targeted implementation that performs optimization to portion of the traffic, at specific points in time in specific locations, driven by policy engines or relying on network congestion detection, either on explicit indication from the RAN or interpolation relying on the state of the TCP traffic. Most vendors are also now launching customer engagement tools, sophisticated analytics or new video charging capabilities to enable early monetization plays.

As usual, I provide market share calculations in term of deployment per vendor, the unit being one operator / country. For instance, Verizon Wireless counts for one deployment, even though the operator might deploy 40+ data centres. Groups such as Vodafone, Deutsche Telekom or Telefonica count for each of the properties where the technology is deployed.

Market shares

1. Flash Networks
   Flash Network’s market share is 40% . It is the market share leader and has grown faster than the market since the last update, through organic growth and acquisition of Mobixell Networks.
2. Citrix
   Citrix’ market share is 30%. The company has grown faster than the market  since the last update.
3. Openwave Mobility
   Openwave Mobility's market share is 8%. The company has grown faster than the market since the last update.
4. Venturi Wireless
   Venturi Wireless markets is 8%. The company has lost market shares since the last update.
5. Others
   Allot, Avvasi, NSN, Opera, Vantrix (in alphabetical order) share the remaining 14%.

The market share calculations are based on a proprietary {Core Analysis} database, collecting data such as vendors, resellers, value of the deployment in term of total cost of ownership for the operator, operator name, country and region. These data are cross-referenced from vendors' and operators' individual disclosures. This database also includes over 130 opportunities in video optimization that are at different stage of maturity (internal evaluation, vendor trial, RFI, RFx...) and will close over the next 18 months.

The market share is valid at the time of publishing but change on a weekly basis, as new deals are awarded.

The market share in term of revenue is not published here but is available as part of my workshop on the video optimization market. The rankings in term of revenue per vendor are quite different from the installed market share, as different price strategies and different geographic markets are considered.