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It has been over seven years since operators and OTT players began to cooperate with each other, forging partnerships that have enabled both parties to boost revenues and user numbers the world over. This trend has continued to gain vigor, and the nature of such alliances has reached new levels of sophistication and depth. Previously, the primary goal of such a partnership from an operator perspective was to grow broadband revenues. Now, operators are looking to work closely with OTT players to offer their customers bundled pricing plans and exclusive premium services, enhance their value-added services portfolio, and even create cobranded services such as the E-Plus WhatsApp SIM and MTNL’s Hungama video service.

Ovum has tracked over 900 partnerships across mobile and fixed operators over the past seven years, and it is evident that Facebook is the partner of choice, with 19% of all operator alliances including the social media giant. However, in terms of content category, nearly half of the deals involve music and video services. This is important because there has been a major shift here, with video and music having displaced the former top content categories of communications and social media. Video is leading the way forward: the number of paid video service partnerships doubled year on year in 2016.

Interestingly, there is also a growing trend of partnerships between regional OTT players and operators. In the early days, the main partnerships were forged with global players such as Facebook and Netflix, but several smaller regional OTT players are now entering new markets by partnering with overseas operators, banking on the operator’s strong presence in its home market to give traction to the OTT service. Another trend worth noting is the surge in partnerships between Facebook and telcos in which users can access the OTT player’s services without data charges, under Facebook’s Free Basics initiative, in high-growth markets such as Cambodia, Maldives, and Mozambique. Similarly, Google has a number of partnerships in place for its SMS replacement RCS services with telcos including Telenor, Deutsche Telekom, and America Movil.

This evolution in partnership type is occurring at a global level and is creating monetization opportunities for operators. The dominance of music and video partnerships is a result of the fact that many of these services are subscription-based and are paid for by the end user. Aside from launch offers, discounted bundling of premium OTT video services is relatively rare. Operators more typically use third-party OTT SVoD offerings to demonstrate broadband or pay-TV use cases and help drive sales of higher-value data plans, and in many cases they offer no subsidy or promotion of the subscription beyond the standard introductory offer. Out of the 52 live partnerships with Netflix tracked by Ovum, for example, only 10 (19%) involve bundling, while the majority involve delivering the service to operators’ TV set-top boxes. Because the new business model is sustainable, the partnerships that have emerged have stood the test of time – 90% of all partnerships launched after 2015 are still in play today.

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