Over-the-Top Communication Service Provider Vendor Guide
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1 July 2015 Over-the-Top Communication Service Provider Vendor Guide Frost & Sullivan Analysis by Gina Villanueva Connected Home (CH) Volume 5, Number 3
2 Over-the-Top Communication Service Provider Vendor Guide Table of Contents Executive Summary... 5 Introduction... 6 Market Breakdown... 7 Voice Service Providers... 8 Directory Services/Local Search Video Service Providers Cloud and Backup Service Providers Applications ecommerce egaming Social Media Streaming Music The Last Word CH 5-3, July 2015 Frost & Sullivan, 2015 Page 3
3 Over-the-Top Communication Service Provider Vendor Guide List of Figures Exhibit 1: The New OTT Service Space... 6 Exhibit 2: U.S. OTT Revenue (Market Estimate, Various Base Years) Exhibit 3: Voice Services Revenue (Market Estimate, Various Base Years) Exhibit 4: Voice Service Providers... 9 Exhibit 5: U.S. OTT Directory Services Revenue ( ) Exhibit 6: Directory Service/Local Search Exhibit 7: U.S. Video Services Revenue ( ) Exhibit 8: Video Service Providers Exhibit 9: U.S. Consumer Cloud Services Revenue ( ) Exhibit 10: Cloud and Backup Service Providers Exhibit 11: Online Consumer Application Revenue ( ) Exhibit 12: Applications Exhibit 13: U.S. ecommerce Revenue ( ) Exhibit 14: Goods and Services Acquired on the Internet (North America 2014) Exhibit 15: ecommerce Exhibit 16: U.S. egaming Revenue ( ) Exhibit 17: egaming Exhibit 18: U.S. Social Media Revenue ( ) Exhibit 19: Social Media Exhibit 20: U.S. Streaming Music Revenue ( ) Exhibit 21: Streaming Music CH 5-3, July 2015 Frost & Sullivan, 2015 Page 4
4 Over-the-Top Communication Service Provider Vendor Guide Executive Summary Life in the bit stream: now, connected consumers can watch their favorite videos over the Internet; shop for anything they can imagine; monitor their homes; even feed their cats. The consumer communication services space is now in the cloud, and will increasingly be a digital artifact. Ultimately, people will live much of their life in a virtual world. Yet, this new virtual communication environment is still a vague concept for many. Traditional carriers, especially, seem to under-appreciate the magnitude of the looming age of virtual interaction. Since they are the suppliers of access, the feeling seems to be that it does not matter what is traveling over the digital pipes they provide, as long as they are paid for building and terminating those pipes. As has been discussed in other Stratecast Frost & Sullivan reports, consumer value perception has evolved beyond simple connectivity. The result has been a willingness to drop conventional service, such as subscription television and landline voice, in favor of Internet-accessible streaming video and telephone service. The new dual play is a blend of broadband access (both wired and wireless) and over-the-top (OTT) services. And these OTT services are not restricted to communication offerings. In fact, it is the very diversity of services that can be delivered digitally that has most of the carriers stumped. As consumers increasingly judge communication services on the ways in which they integrate with such activities as retail commerce, mobility, demographics, and social media, carriers are rapidly being left behind as the consumer market evolves to a new integrated service space. A focus on simple access largely denies carriers the opportunity to generate high margins and increasing revenues. OTT services now include traditional communications, two-way video communications, social media communications, social interactions such as e-gaming, as well as ecommerce. Each of these is a complete market in itself, but, combined, cover just about every existing conventional market. Achieving anything like a comprehensive guide to the entire OTT space, then, is probably not practical. However, representative players for the major market niches can be identified; and this can serve as a good overview of the space as it is evolving. This year s OTT Vendor Guide defines a starting point: one that will be expanded as the market grows. It is the intent of Stratecast Frost & Sullivan to maintain this guide as a foundation for continuing industry discussions, and as a directory for interested parties to locate players in the OTT space. CH 5-3, July 2015 Frost & Sullivan, 2015 Page 5
5 Introduction 1 The over-the-top (OTT) market is not a physical thing in the sense that a traditional market is physical. That is, it is less a place of physical interaction than it is an information space defined by applications, and delivered to the consumer over a digital bit stream (see Exhibit 1). This enables it to achieve a level of flexibility and customization that is hard to imitate over traditional telecommunication networks. In a sense, the OTT space is defined in the cloud, and is merely a set of cloud services. Exhibit 1: The New OTT Service Space Source: Stratecast Frost & Sullivan As a result of the range of potential applications that could be delivered over-the-top, the OTT space is enormous: comprising literally tens of thousands of vendors offering hundreds of thousands of services. This makes characterizing the OTT market challenging. However, it is not an impossible task. In any market there are those players which tend to stand out; ones whose activities and offerings tend to define that market. These players tend to be the ones that analysts watch, to measure the evolution of a market; and these are the ones that Stratecast Frost & Sullivan has included in this guide, to measure the OTT space. This vendor guide cannot hope to be comprehensive, but it can serve as a valuable guide to the domains present in the market, as well as the players likely to gain traction in each sub-market. Interested readers are encouraged to assist in maintaining and expanding this guide by contacting the Stratecast Frost & Sullivan Connected Home team with those companies that they consider to be significant. As this guide will be regularly maintained and expanded, the Stratecast Frost & Sullivan team will do its best to respond appropriately to all communications. 2 A reasonable question, then, is why even attempt a vendor guide for a market that is as large and varied as the OTT market? The answer is simple: one can t manage what one can t see. For decisionmakers, either business or consumer, who are attempting to make a purchasing decision, it is helpful to understand the options available. It is also helpful to understand the alternatives to a particular sales pitch. It is frequently the case that a vendor will offer a product that is represented as unique or which is positioned as a market leader. Understanding that a vendor may not be unique or necessarily a market leader can be a very useful thing, especially when price points for most OTT 1 Please note that the insights and opinions expressed in this assessment are those of Frost & Sullivan and have been developed through the Frost & Sullivan research and analysis process. These expressed insights and opinions do not necessarily reflect the views of the company executives interviewed. 2 Any communication concerning this guide should be directed to: Perry Somers (Perry_Sommers@frost.com) CH 5-3, July 2015 Frost & Sullivan, 2015 Page 6
6 offerings range from zero to many thousands of dollars. So, while this guide may not boil the ocean as far as the offerings available, it is still a valuable foundation on which to make decisions. This guide begins with a short primer on the OTT market, how it is parsed and how it is evolving; then offers a directory, sorted by service types, that lists major players in each of the sub-markets. Interested readers are encouraged to read the primer, and then skip to the sections of most interest. Market Breakdown The OTT market, as noted above, can generally be thought of as a collection of applications. Stratecast Frost & Sullivan has broken these down into the following broad categories: Voice Services: Including OTT point-to-point voice and conferencing. Directory/Local Search: Including browsers, local search and directory services. Video Services: Including subscription-based services, as well as streaming video content and point-to-point video. Cloud/Backup Services: Including backup and archival services, and temporary media storage. Applications: Including personal productivity and personal use applications. ecommerce: Including online shopping services and market exchanges. egaming: Including MMORPG and individual skill and one person games; but not online gambling. Social Networking: Including social interactive spaces and collaboration sites. Streaming Music: Including music downloads and over-the-top music streaming. As will be noted, each category includes the primary applications for that space. The reader will also undoubtedly note that there are opportunities for each of the identified spaces to overlap and encompass functions from some of the others. In fact, this is very common; and, in some instances, a single player will be identified in more than one category. However, these broad categories tend to define the market into buckets for which revenue projections can be made. In each of the following sections, the overall United States market potential is provided, with important qualifiers as to the revenue that is included. For example, it is possible to size a market in terms of not only the end user revenue being generated, but all of the additional services and products required to generate that revenue. In the case of voice services, for example, this might tend to greatly amplify the size of the market in a way that is unrealistic. The point of view of this guide is that of the end user or final customer for a service. Interested readers who wish to understand the technology infrastructure are encouraged to contact research teams in Frost & Sullivan who track it. Overall, the OTT market is enormous and can be characterized as shown below in Exhibit 2. As can be seen, cumulative annual revenues are projected to exceed $ billion in the United States alone. CH 5-3, July 2015 Frost & Sullivan, 2015 Page 7
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