As online video has become more pervasive in the consumer world for applications such as entertainment and communications, it is also being used increasingly for productive purposes. We haven't discussed this category much in the past, and there are reasons for it.
Pay-TV services dominate our coverage of video, and they should. Pay-TV and entertainment video overall is responsible for the majority of revenue generated by video services, and the majority of network bandwidth utilized. For example, most people involved with telecommunications know that Netflix takes up more than 35% of peak downstream bandwidth in the US. (See Sandvine: Netflix Traffic Share Falls, But Still Dwarfs Rivals'.)
Video communications, including services such as Skype, Facetime, Facebook Messenger, Whatsapp as well as corporate web conferencing applications from Cisco, Citrix and others, are also increasingly pervasive.
And there's user-generated content or UGC, and the share of video in this segment is is poised to grow rapidly. YouTube has already had a huge impact on the average consumer's ability to post and share video, and other social networks are further facilitating UGC video usage. We anticipate that this will pick up pace in coming months, as live streaming takes off. Facebook founder and CEO Mark Zuckerberg has said that he expects Facebook to be mostly video in coming years, and the usage of services such as Facebook Live, Twitter's Periscope and Snapchat's Live Stories offer a snapshot of the future of social media. (see Social Video Could Be the Next Great Challenge for Network Operators.)
Big Video Includes Multiple Video Applications
Source: Heavy Reading, 2016
But the last category -- "productive video" -- has been harder to define and we have struggled even to find the right term to describe it. Even so, it is an important category for those evaluating network traffic and opportunities for video services.
As consumers have become more comfortable using the web for video-based entertainment and communications applications, they are looking for video-based tools for more functional applications as well. A good example would be software collaboration platform provider Atlassian acquiring video conferencing service BlueJimp last year. According to Michael Lauricella, director of business development at the company, developers using Atlassian products were increasingly asking for video communication to be integrated into the platform. While video isn't used extensively, there are times when video communication can greatly enhance project collaboration.
Three years ago, a Cisco study of young executives (under 34 at the time) found 60% anticipated they would rely more on video in coming years, with 87% saying it had a significant and positive impact on an organization, ranging from enhancing the experience of telecommuters to saving money on travel costs and even attracting top talent.
This summer Microsoft Azure announced Stream, a new cloud video service for business, as part of its launch of the Microsoft App Source. Stream is aimed at facilitating the simple creation, hosting and distribution of videos for enterprise usage, according to Sudheer Sirivara, general manager of Azure Media Services. It helps enterprises with "learning, training and communicating." This can include training videos, corporate messaging such as CEO speeches, product videos and communication. Integrated into the Azure platform, Stream also provides enterprises with tools for access control, security and authentication for all videos.
While these are basically communications functions that are being integrated into enterprise tools, there are also other business functions for which video is increasingly being used. These include customer care, client interactions and sales, video surveillance and security, corporate social videos and video blogs, investor relations and, of course, marketing and digital signage.
Even outside of traditional enterprise functions, there are a variety of specialized video-based applications that are being explored today. The automobile industry, for example, is developing driverless cars that use video cameras. Universities, other educational institutions and industrial training providers have developed online learning courses in the past, but they are increasingly adding video to provide a richer, more effective learning experience and also extending e-learning to topics and activities where text and graphics may not have been effective. Similarly, hospitals and medical facilities have long used the web for disseminating healthcare advice, but video allows for remote diagnostics and individual advice for certain medical problems. China Telecom Corp. Ltd. (NYSE: CHA)'s Sichuan division, for example, is providing such a service as part of its Big Video product suite. (See China Telecom Pushes Big Video in Sichuan.)
Emerging video formats such as virtual reality offer even more potential. VR could revolutionize training experiences for a range of mechanical and industrial processes in the way that airplane simulations have for training pilots. But rather than creating an extremely expensive, customized solution, VR would allow for a range of applications at a considerably lower price.
Similarly, the potential for remote healthcare could be significant.
While operators have been involved in various aspects of video delivery to the enterprise, comparatively few have really explored the opportunities for enabling such services. We have mentioned China Telecom's Sichuan division, which offers a number of innovative video-based services, and AT&T Inc. (NYSE: T)'s Video Management Services offer a host of applications aimed at the enterprise. Others such as Verizon Communications Inc. (NYSE: VZ), BT , Deutsche Telekom AG (NYSE: DT) and Telefónica , offer a variety of digital media services for marketing and communications.
But in general productive video has been less clearly identified, studied and targeted. Operators have not clearly evaluated its potential, targeted the opportunity and understood the network impact of such services. While entertainment, consumer communications and UGC video are likely to be larger in terms of usage and network volume, productive video will have a significant impact as well.
Operators will have to cope with the network impact of productive video, but they also are well-positioned to benefit from it. Many already offer video processing platforms, cloud-based services and CDNs either directly or via an established partner ecosystem. They also have extensive enterprise relationships in place for communications services and the larger players have sizable enterprise sales teams that can quickly go to market with new video-based applications and services.
Operators in emerging markets have additional advantages. In many markets they are the only established players with the scale and credibility to launch such services, while local OTT competition is less prevalent. Markets with fewer technology-savvy consumers can also leverage TV-based services to address marketing and consumer education needs of enterprise customers, reaching consumers who don't use the PC- or mobile-based web. Incumbents are also better positioned to raise capital or acquire companies with relevant skills or technologies.
Productive video is far from a slam-dunk. Today, it is more of a basket of applications and services that don't fit into any other category and present an inconsistent set of demand profiles. But we think there is an opportunity for operators here, and it's worth taking a look at.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation