May 15, 2024

Telco-OTT partnerships around the world

While telco-OTT partnerships generally gain revenue and benefit each region, companies should remain flexible and agreeable to see further success. By Ching Wai.

Europe, Asia-Pacific - Partnerships between telecommunication companies (or telcos) and over-the-top media services (OTTs) have been a strong and growing driving force of revenue. Last year, over 16% of the operators were confident in making gradual revenue from OTT services, which has amounted to 288.19 billion USD worldwide. In hindsight, such partnerships are mutually beneficial as telcos readily provide a billing mechanism to deliver content from OTTs, who gain to grow their subscriber-base. After looking at some of the biggest U.S. telco-OTT partnerships, let us expand our vision into the markets around the world, from Europe to Asia-Pacific, focusing on partnerships involving streaming.

Europe

Top telcos in Europe include Deutsche Telekom, Swisscom, and Orange, who partner with OTTs like Rakuten TV. Last year, OTTs brought an estimated €36-40 billion annual revenue to partnering telcos. The partnerships are expected to benefit not just the European economy, but also provide an abundance of jobs.

Canada

The major telcos are Rogers Wireless, Bell Mobility and Telus Mobility, which have a total of 33.2 million subscriptions and a combined 86% of the market share. Over 50 OTT services from over 35 providers, including Netflix, have contributed to the Canadian access revenue growth of 23% to 3.3 billion USD in 2022.

China

The country offers three integrated telcos - China Mobile, China Telecom, and China Unicom. Telco-OTT partnerships added up to approximately 40-60% of the telcos’ revenues as of early 2023. Revenue projections for telco-OTT partnerships, like with Tencent Video, iQiyi, Youku and Bilibili, reach 22.02 billion USD for 2024. With the market size projected to reach 547.43 billion USD by 2028 and the country embracing digital transformation in all sectors, telco-OTT partnerships can be expected to reap positive results.

South Korea

Telcos like SK Telecom, LG Uplus, Korea Telecommunications Authority (KT) have secured partnerships with OTTs like Netflix, Disney+ and Apply TV+. The bundles offered keep customers from OTT-only services, while the telcos pay their partner OTTs royalties. While sales revenue from telcos have been steadily decreasing over recent years, projected revenue for OTTs is at 4.6 billion USD for 2024.

India

In 2023, revenue from telco-OTT partnerships could not reach expectations despite the great customer reach, due to high costs of customer acquisition. At the same time, the telcos like Reliance Jio and Bharti Airtel were projected to lose up to 2.8 billion USD of authentication revenue to OTT channels in the next five years. While consumers are ready to pay for the services, it would be difficult for telcos and OTTs in India to profit should mutually beneficial agreements fail to be reached.

While regulatory and competitive hostilities like digital service taxes and high customer acquisition costs do pose as barriers to entry for telcos and OTTs to expand, the partnerships continue to see overall success and growth. This trend is likely to persist as demand for services like streaming increases. Yet, telcos and OTTs alike should remain flexible amidst the continuous advancements in technology and the ever changing entertainment market.

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