Thursday, October 28, 2010

New Revenue for SPs Opportunties in Internet Video

Internet-based video consumption is booming all over the world, but most telecommuni-cations operators are not benefiting from it. They must sustain the infrastructure costs needed to support this fast-growing traffic, but they have not been able to create associated incremental revenues. Service providers are trying to find ways to turn this potential threat into an opportunity by generating new, profitable revenue streams from the rise of Internet video.

Cisco IBSG suggests that service providers have the opportunity to turn Internet video costs into profits, initially through a two-sided business model that offers:

1. High-quality content delivery services to content providers
2. A “TV-ready broadband” service for consumers that delivers Internet video with quality equivalent to that of traditional television

Cisco IBSG analysis shows that access-based telecommunications operators can develop a highly profitable business by offering these two services together, with expected earnings before interest, taxes, depreciation, and amortization (EBITDA) margins above 70 percent.

Today, Internet video accounts for less than 2 percent of the total time Americans spend watching video. But with more sophisticated video services coming from the Internet, and with Internet-connected TVs, the time consumers spend watching Internet video could rise significantly—potentially reaching 50 percent of their overall video viewing time in 10 to 15 years. Now is the time for service providers to begin realizing the opportunity of Internet video.

Download the complete document

No comments: