Operator strategies for maximising partnerships with value ... · Operator strategies for...

Operator strategies for maximising partnerships with value-added service providers

Operator strategies for

maximising partnerships with

value-added service

providers

Rémy Pascal


KEY QUESTIONS ANSWERED IN THIS REPORT WHO SHOULD READ THIS REPORT

This report analyses the partnerships formed between operators

and third-party content and services providers. It explores

partnership options and provides recommendations for operators

and third parties that wish to pursue partnerships to deliver

video, music, gaming and other value-added services (VAS).

It is based on several sources:

▪ Analysys Mason’s internal research including the Connected

Consumer Survey series

▪ interviews with stakeholders at telecoms operators as well

as some of the largest third-party service providers.

2

About this report

▪ Where and how can operators and third parties build partnerships?

▪ What are the benefits for operators of partnering with third parties to

provide VAS?

▪ What are the different types of partnerships that operators can form?

▪ Strategy teams and partnership managers working for operators.

▪ Marketing executives and product managers for operators that are

making decisions about VAS strategies and partnerships.

▪ Providers of video, entertainment and other VAS that are looking to

establish partnerships with telecoms operators or that wish to better

understand the strategies of operators.

▪ Vendors that provide solutions to operators and online service providers

for the provision of third-party services.

SCOPE OF THE REPORT

▪ This report focuses on partnership-led VAS strategies rather than other

operator-led build-your-own VAS strategies.

▪ This report focuses on value-added services instead of operators’ voice

and messaging services.


ContentsExecutive summary

Research overview

Developing existing partnerships

Exploring new value-added services

Taking advantage of 5G for new services and capabilities

About the author and Analysys Mason


The provision of third-party video and music services by

operators has become commonplace, and as such, only offers

limited differentiation. Operators should explore more-

sophisticated types of partnerships, consider forming

partnerships in new areas and prepare to take advantage of 5G

to enhance their partnership capabilities and create new

monetisation opportunities.

Operators should consider enhancing their existing video

partnerships with models that go beyond simple marketing

agreements and including some form of commercial and/or

technical integration in order to find revenue growth opportunities

and maintain a competitive advantage. They should also identify

new areas for potential revenue growth, such as gaming and

connected car services, that offer benefits for both them and

their partners.

Figure 1: Operator strategies for partnering with value-added

service providers

4

Executive summary

KEY RECOMMENDATIONS

1. Operators should consider developing their existing

partnerships in order to differentiate.

2. Operators should explore partnerships in areas beyond

video, including gaming, car connectivity and

entertainment, smart home, insurance and finance.

3. Operators should take advantage of 5G to enhance their

partnership capabilities and create new monetisation

opportunities.

Develop organisation and partnership

capabilities

Develop infrastructure and platforms to support

partnerships

Develop existing

partnerships

Explore new

areas

Take advantage

of 5G

• Video

• Music

• Cloud gaming

• Car services

• Smart home

• Financial

services

• Enterprise

and IoT

• Cloud gaming

• VR gaming

and video

• AR gaming

and personal

assistants

• Enterprise

and IoT



Research overview






Partnerships based on the simple bundling of video and

music services no longer allow operators to differentiate.

The majority of operators around the world understand the

importance of OTT service providers and the necessity to partner

with them in order to remain competitive. Video, music, social

media and communications services have been, and still remain,

the main areas of focus for partnerships, and the likes of

Facebook, Netflix and Spotify are often the designated partners.

These partnerships are often replicated with a number of

different operators, which weakens their ability to act as

differentiators.

These partnerships have evolved over the years and partnership

dynamics vary by operator, partner and geography, but simple

marketing agreements are still the norm. In emerging Asia–Pacific

for example, many operators have zero-rated their OTT services

and positioned themselves as aggregators. The widespread take-

up of this strategy has meant that operators have had to incur the

costs of forming partnerships without being able to create

sustainable differentiation.1

Operators can benefit from partnering with third-party service

providers, but these benefits may not always meet operators’

expectations, and may sometimes vanish over time as

competitors follow suit. As such, operators should consider new

areas for partnerships and new partnership models.

Figure 2: Expected benefits for operators of partnering with

third-party content providers

6

Challenge: simply bundling third-party content services offers operators only limited

opportunities for differentiation

1 For more information, see Analysys Mason’s TV and video services: how operators and pay-TV providers can avoid fragmentation,

embrace change and partner more

▪ Attract new customers

with unique content and

services

▪ Upsell customers to higher

value plans

▪ Increase revenue from

value-added services

(VAS), particularly if

revenue sharing with the

partner

▪ Stimulate traffic, which

may lead to an increase in

data revenue

▪ Increase customer

satisfaction and reduce

churn

▪ Manage costs by using

third-party apps/content

rather than developing

apps/content in-house

▪ Use partners’ delivery

infrastructure, for

example, their CDN

▪ Take advantage of

partners’ brands for

marketing

Improving their

position

Defending their

position

Source: Analysys Mason

https://www.analysysmason.com/Research/Content/Reports/TV-video-roadmap-RDVS0/


Operators should continue to partner with third-party service

providers, but should find ways to differentiate from their

competitors and to monetise collaborative activities.

Operators should consider partnerships that go beyond the basic

bundling of video and music, explore partnerships in new areas

and take advantage of 5G in order to differentiate. 5G is expected

to open up new roles for operators, create additional revenue

opportunities and facilitate collaboration, but it may also

introduce new competition. As such, operators will have to

develop new strategies in order to remain competitive.

There are many different types of partnership, and it is not

possible to say that one type will be better than another. In each

case, the success of the partnership will depend on the

operator’s strategy, assets and capabilities, the partner and the

addressable market. Strengths and weaknesses will vary from

operator to operator and from one partner to the other, but

operators will often have expertise on local markets, connectivity,

customer acquisition and retail presence, while partners are more

likely to be knowledgeable about their specific domain, product

innovation and agility.

In this report, we focus on partnerships in the consumer segment,

specifically in areas related to entertainment. There are other

digital initiatives that represent partnership opportunities for

operators (including payment and banking, insurance, security

and e-commerce), but these are not covered in this report.

Figure 3: Performance of third-party players and operators in a

number of categories

7

Solution: operators should build more-sophisticated partnerships with third-party

content and service providers, consider new areas and take advantage of 5G

OperatorsThird-party players

Global reach

Local reach and

expertise

Financial backing

Customer

relationships and

billing

Regulator and

consumer trust

Connectivity expertise

Software and cloud

expertise and agility

Weak Strong

Source: Analysys Mason


Recommendations

8

1Operators should consider developing their existing partnerships (particularly those with video service

providers) in order to differentiate.

The most successful operators have started to transform their relationships with video service providers from

simple marketing agreements to more-sophisticated partnerships that include commercial integration with

bundling and carrier billing as well as technical integration with the set-top-box and pay-TV user interface.

Operators should also consider new genres for their video content in order to retain their audiences.

2Operators should explore partnerships in areas beyond video, including gaming, car connectivity and

entertainment, smart home, insurance and finance.

Gaming services have a large addressable market, and can be bundled with fixed and mobile offers. However,

operators should qualify the demand for such services and realistically assess their capabilities before deciding

on their role in the value chain. Operators should also consider developing in-car entertainment and connectivity

services, and should treat the car as a new device category if it helps monetisation.

3Operators should take advantage of 5G to enhance their partnership capabilities and create new

monetisation opportunities.

Operators should take advantage of 5G, edge computing and virtualisation to enhance their partnership

capabilities. They should use their partners’ video and game content and their own enhanced delivery capabilities

to persuade customers to migrate to 5G. Operators should also explore new applications including virtual and

augmented reality to justify the edge investment required for enhanced video and gaming.



Research overview






About the author

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Rémy Pascal (Senior Analyst) joined Analysys Mason’s Asia–Pacific research team in August 2018 and is based in the Singapore office. He also

contributes to other research programmes including those in the Consumer Services research practice. Rémy has more than 8 years of

experience in the telecoms and ICT sectors. Before joining Analysys Mason, Rémy worked in various market intelligence positions at Samsung

Electronics’ Networks Business in South Korea, Orange in France and the French Trade Commission in South Korea and Taiwan. Rémy holds a

master’s degree in management from Rouen Business School in France.


CONSULTING

We deliver tangible benefits to clients across the telecoms

industry:

▪ communications and digital service providers, vendors,

financial and strategic investors, private equity and

infrastructure funds, governments, regulators, broadcasters,

and service and content providers.

Our sector specialists understand the distinct local challenges

facing clients, in addition to the wider effects of global forces.

We are future-focused and help clients understand the challenges

and opportunities that new technology brings.

RESEARCH

Our dedicated team of analysts track and forecast the different

services accessed by consumers and enterprises.

We offer detailed insight into the software, infrastructure and

technology delivering those services.

Clients benefit from regular and timely intelligence, and direct

access to analysts.

Analysys Mason’s consulting services and research portfolio

29

Analysys Mason’s consulting and research are uniquely positioned


Research from Analysys Mason

30


Consulting from Analysys Mason

31


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Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any

client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only.

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JULY 2019

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