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Summary

Ovum's OperatorOTT Partnerships Tracker: 2H16 indicates that partnerships between OTT players and operators are on a clear evolutionary path. The tracker, which covers more than 900 deals since 2013, has seen an increase in cooperation among operators and OTT players, going well beyond OTT branded data access bundles, leading to more sophisticated service propositions for the consumer. The tracker also revealed that partnerships between OTT music and video services, such as Spotify and Netflix, and operators are the most popular as they have a business model in place and are sustainable for both parties in the long run.

Facebook is still seen as the most popular partner for telcos

Analysis of Ovum's OperatorOTT Partnerships Tracker: 2H16 has revealed some interesting results in terms of choice of OTT partners and the evolution in the types of partnerships. The tracker collates a wide range of partnerships across music, video, social networking, communications, and utility services, with more than 900 deals recorded. Facebook is the most popular partner for telcos, with more than 160 partnerships being forged with telcos between 2013 and end 2016. Facebook's popularity is not waning with time – it was the most popular partner in 2H16, with 19% of all recorded partnerships being forged with Facebook.

As consumers mature in their use of data services, the nature of these operator–OTT partnerships is changing. In the early days, social media was the leading category, as most telcos would offer social media–based data bundles, such as WhatsApp or Facebook bundles, providing unlimited use of an OTT service for a fixed time period. This type of partnership is perhaps the most rudimentary type (Ovum refers to this as a Type 1 partnership). Over time, as users have opted out of OTT bundles to an unlimited data access plan that covers more services, the dominant partnership type has evolved into Type 2 partnerships, where there is some level of cooperation between the two players, either through billing or revenue sharing, and the main purpose of the collaboration is to grow brand awareness among consumers for both the OTT service and the telco. Type 2 partnerships have now become the most common type of partnership, with 60% of all partnerships being classified as such. Examples include partnerships between Telia and Spotify in Sweden or Netflix and T-Mobile in Poland. Therefore, it is not surprising that over time, video and music services have become the leading content category for partnerships. This is because the partnership can be easily monetized as it's a paid service and provides a long-term sustainable model for both telco and OTT services.

Another interesting insight from the tracker is that most partnerships between operators and OTT players are long lasting; they are not stopgap arrangements, and both operators and OTT services are creating long-lasting services that are being used (and maybe even paid for) by the end consumer. Approximately 90% of partnerships from the beginning of 2015 to end 2016 are still live and available to the customer. Moving ahead, Ovum expects to see a stronger degree of cooperation between OTT service providers and operators.

Appendix

Further reading

Operator–OTT Partnerships Tracker: 2H16, TE0003-000997 (January 2017)

Remaining Relevant in Communications: Partnering with WhatsApp, TE0003-000935 (August 2016)

"Millicom (Tigo) partners with Netflix in Latin America," TE0001-001035 (June 2016)

Ovum's Innovative Service of the Month: Zain's multiple-country partnership with Uber, TE0009-001475 (November 2015)

Telco–OTT Partnership Series: Netflix and Pay-TV Operators, TE0003-000805 (November 2014)

Telco–OTT Partnership Series: Sprint and Spotify, TE0003-000785 (August 2014)

Telco–OTT Partnership Series: Telefonica and Rhapsody, TE004-000744 (January 2014)

Telco–OTT Partnership Series: Axis Telekom and Viber, TE004-000753 (January 2014)

Telco–OTT Partnership Series:China Unicom and Tencent, TE004-000745 (December 2013)

Author

Neha Dharia, Senior Analyst, Consumer Services

Neha.dharia@ovum.com

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