Telecom Positioned to Benefit from Streaming Video and Audio Market

A recent Insight Research study says IPTV, along with streaming video and audio, will generate $70 billion in revenue over the next six years. Insight president, Robert Rosenberg, says the telecom companies are poised to capture much of that revenue so long as they can create flexible business plans to accommodate changing revenue trends. According to Rosenberg, there’s a good chance telecom companies will benefit more than the cable and broadcast companies because they are not so commited to a specific business model. It is clear consumers are willing to pay for on-demand audio and video, Rosenberg said, which is why he forecast a compounded growth rate of 29% from $5.2 million in 2008 to $17.8 million in 2013. Rosenberg also said the business models for revenue capture are still evolving. While streaming audio services, namely Apple’s iTunes, have seen great success on a subscription model, it’s very likely that streaming video will evolve as an ad-supported model, the Insight report states. “Telecom companies like Verizon and AT&T have already capitalized on this trend by building the networks to deliver this content. The question now is when do they start making money on those networks,” Rosenberg said. “In our report, we forecast both IPTV as a platform for revenue as well as streaming media [over broadband pipes]. Network-derived services – encoding, DRM, etc. – that is the underlying pure play from a telecom point of view. They are going to make money on that.” “By 2013, the biggest numbers by far, anywhere from three to four times the other numbers, was the IPTV content and the streaming content,” Rosenberg said. “Those are the big buckets. However, the notion of a walled garden becomes more difficult to maintain. The cable operators, given the longevity of their business models, probably will have a much more difficult time adjusting to a new reality than the telephone companies who are just getting into it.” There will likely be many new models introduced as the Internet streaming video model advances beyond current content models. There stands to be a great benefit to the phone companies if they can remain flexible with their business models and evolve accordingly with these new service models.