Almost two-thirds of mobile network operators (MNOs) worldwide already are offering a mobile video service as part of their portfolio, a reaction to the changing content-consumption habits of consumers, especially Millennials and Gen Edge.
In North American and APAC markets, a whopping 86% of operators offer video services, followed by the Middle East and Africa at 71%, according to a new study from industry researcher Kagan. The report shows that Europe at 28% has the fewest mobile video services on a country-by-country basis, due partially to concerns over its net neutrality rules.
While those numbers are high, offering a mobile video service has been table stakes for MNOs in competitive markets for a while, and the demand for those services is likely to grow, especially as faster networks become the norm and as next-gen technology – like 5G -- begins to roll out. More than 60 operators already are offering 5G trials around the world.
Mobile industry association GSMA, in fact, estimates that by 2021 13% of U.S. mobile subscribers, and 8% of Canadian mobile users will have adopted 5G technology. Those numbers are expected to soar to 49% in the U.S. and Canada by 2025. Europe will be next at 31%, and China, Japan and South Korea will be an aggregate 29%.
Kagan – which conducts media research for S & P Global Market Intelligence – in its 2018 Economics of Mobile Programming, posits that broadcast and media companies will need to focus more on mobile delivery to be part of the trend to bundle entertainment with mobile services.
That, in turn, will add fuel to the growing trend of consumers cutting the cord to legacy pay-TV providers, opting instead for mobile delivery of entertainment services to the home.
Initial bundles of content – like the DirecTV Now service from AT&T – likely are precursors to more robust offerings from MNOs, including (in the U.S.) Verizon, AT&T, Sprint and T-Mobile, as those providers look to make their offerings more attractive, to reduce churn and become “a one-stop shop” for wireless, home broadband and video services.
“As 5G moves forward, over the next decade consumers will increasingly make a choice between wires versus wireless for home broadband,” said John Fletcher, Principal Research Analyst with S&P Global Market Intelligence.
Mobile offerings in Europe, meanwhile, are generally available in markets with the most strident competition. In those markets, MNOs are making access to services like Netflix – or their own services – available at reduced rates for limited periods of time to attract users.
Mobile video services could potentially be a boon to European operators especially, as they have had a difficult time increasing average revenue per user (ARPU) compared to operators in other regions. Despite huge growth in the use of smartphones and the concurrent increase in mobile data usage, OTT apps like Skype and WhatsApp have provided unexpected pressure on MNOs in Europe, leaving ARPU flat – or even declining in some countries. North American operators, too, have seen ARPU improvements hard to come by, a result of an increasing number of MNOs offering unlimited data caps.