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Summary

Operator–OTT partnerships are a recurring theme at the annual OTTtv World Summit held each November in London. Although collaborative alliances weren't the main focus of this year's event, it was clear that they remain a fundamental strategic consideration for online video service providers, MNOs, and pay-TV distributors.

Not all partnerships are created equal

At this year's summit, Netflix's EMEA VP presented a map of the Europe, Middle East, and Asia region, showing where Netflix had partnered with network operators to accelerate its impressive international expansion. Meanwhile, the Turkish player BluTV – a relative newcomer to the European OTT SVOD space – revealed an imminent soft-bundling partnership with a major telco.

Although OTT and telco partners are seldom willing to share details of their alliances – such as take-up rates or commercial arrangements – each side is often keen to publicize its collaborative efforts. At OTTtv World 2017, the UK's TalkTalk explained the benefits of having Netflix and NowTV as optional entertainment choices, citing an ad campaign that uses Netflix as a selling point for its YouView-based set-top-box (STB) platform. Integrating third-party OTT video into a pay-TV STB is a decisive step toward expanding device choice and (hopefully) improving the overall UX. But such integrations don't comprise the bulk of operator–OTT video partnerships, which take on many forms. Ovum's updated Global OTT Video Bundling Deals and Services PartnershipsTracker (due to be published this month) will demonstrate clearly that mobile operations are by far the most common channel for marketing and distributing the services arising from operator–OTT alliances.

The nature of operator–OTT partnerships and the degree of involvement between the two sides vary significantly. Some STB implementations entail close technical integration of (for example) the Netflix application, increasingly supported by carrier billing (and hence some kind of revenue-sharing arrangement). Several other alliances, however, remain at arm's length, with a premium SVOD product sitting alongside a host of other competing services within a standard apps menu, and very little in the way of operator-specific customization of the service. Moreover, hard bundling of OTT video services (whereby they are integrated into an operator's tariff scheme) remains relatively rare, with the majority of promotional offers comprising just two, three, or maybe six months' complementary access, subsidized by the operator.

During its presentation, Netflix showed videos of two TV ads, including one from SFR, which is bundling six months' Netflix for customers taking both its TV STB and mobile packages, and another from Three UK, promoting zero-rated access to the service. Just as network-based operators use third-party entertainment services for upselling customers to higher-value data plans or multiplay bundles, their partners are using the association with operators to market their video offerings. Although we have long recognized the need for network operators to strive for relevance by embracing OTT, the fact that Netflix is highlighting even the loosest form of partnership – one that entails no service-bundling integration – as part of its expansion story is clear evidence that OTTs are increasingly reliant upon operator participation to bring their services effectively to market.

Appendix

Further reading

Global OTT Video Bundling Deals and Service Partnerships, ME0003-000845 (June 2017)

Global OTT Video Bundling Deals and Service Partnerships Tracker, ME0003-000832 (May 2017)

Author

Jonathan Doran, Principal Analyst, TV

jonathan.doran@ovum.com

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