The OTT's meteoric rise in recent years is undoubtedly one of the most notable trends in the telecommunications as well as in the Internet and Information Technology sectors. The popularity of OTT applications fueled the adoption of internet in these last few years as people who were hardly spending time on computers and laptops are now devoting at least a few hours a week to catch up with family and friends and to tune to the latest content available online on the various OTT applications - from Facebook to Youtube, from Netflix to Spotify, from Twitter to WeChat and many others that have since become household names.
It's True - OTTs Drove Mobile Data
More importantly, OTT applications drove the take up on mobile data services and were the ultimate driving force for the widespread use of smart mobile devices, including tablets and phablets. OTTs such as Facebook and LinkedIn as well as Twitter and YouTube created the crucial link between connectivity and economy and society - creating a new layer of services enabled by the availability of virtual meetings, online chats, online collaborations, digital marketing, resourcing, knowledge sharing etc. Within the pool of OTT applications that acquired massive followings, some application types have emerged as the leaders, namely voice and messaging applications that saw hundreds of millions of subscribers signing up and becoming regular users. The success of these voice and messaging applications were driven by the fact that data charges on these OTT applications were cheaper than the cost of sending traditional SMS or making peak-hour voice calls. In addition to this, the OTT applications boast various user-friendly functionalities including custom profile images, enhanced contact lists, quick access to millions of profiles, conversation tracking and provide rich features such as emoticons, location tagging, image and video sharing as well as HD Voice calling. At the same time, the fact that via Wi-Fi, all the calling and messaging becomes completely free of charge created a huge value proposition for many OTT applications of this type.
Gaming and Video-on-Demand are Now the Biggest Applications for OTT
While much attention within the telecom circles has been on the OTT voice and messaging applications, recent data from Visiongain, provided in its 'Over The Top (OTT) Media Delivery Services Market 2014-2019: Strategies for Global Audio, Message, Voice, Gaming & Video on Demand (VoD)' report shows that Video-on-Demand(VoD) and Online Gaming applications are the top revenue segments within the OTT Media Delivery Services market, which in total hit US$51.38 billion last year. The findings point to increased take up of OTT video and gaming applications with today's high speed broadband connectivity enabling richer content to be accessed on both fiber and mobile networks. Subscribers who were once using their smart mobile devices to catch up on a few videos on YouTube are now subscribing to fully fledged on-demand and catch up TV/video services. Similarly, OTT games which are easily downloadable on mobile devices and are supported by the higher processing capabilities of today's smart gadgets offer subscribers a simple way to keep themselves occupied regardless of where they are and what they do. At the same time, OTT music has flourished given the affordable subscriptions and the selection of the widest choices of music/albums made available on today's leading OTT streaming music applications.
OTTs Will Drive Mobile Data Once Again - This Time on Content and Games
For Mobile Operators, the fact that VoD and Gaming are leading the OTT Media Delivery Service market indicates good times ahead - it means that their subscribers will be consuming more data watching movies and playing games compared to the data consumed making calls and messaging. This shift will have a significant effect on Mobile Operators' business - and comes at a time when Voice-over-Mobile Broadband (VoMBB) is starting to take off. With VoLTE deployments increasing rapidly during the second half of 2014, and with VoWi-Fi and VoHSPA showing signs of becoming two other major voice communication alternatives, the MNO-OTT relationship may have passed its most critical phase and is set to turn things around where Operators will be leveraging OTTs to sell more data, provide more attractive bundles, offer joint digital advertising services and provide exclusive rich content for subscribers. OTTs such as Netflix are currently experiencing huge growth in their subscriber base as the company expands to Europe and Australia and MNOs can capitalize its content offers (just as how they have partnered with the likes of Spotify to offer streaming music services) to boost their own multi-screen and digital services offers (read more on how digital TV is starting to slowly take over traditional TV services). If the market for VoD, music, games and other digital applications continues growing at this pace, Operators will find themselves partnering a number of OTT service providers - regardless of these players incorporating messaging and voice communication functionalities on their applications (example Facebook) because the advent of rich communication services via data clearly favours Operators and will enable them to take the competition in the voice and SMS market head-on. Moving forward, Operators can be expected to offer more attractive bundles that include free minutes/discounted data rates on various OTT applications especially those that offer video and music services to drive their subscriptions and capture a bigger market while keeping their voice and messaging revenues.