Two Sides Are Better Than One

January 12, 2011 - 0 Comments

If there’s one thing that service providers are familiar with, it’s change. There’s been nothing but change – wave after wave of disruptive change – from the industry deregulation of the 1980s, the convergence of voice, data, and video of the past couple of decades, to the current era of digital media, which devours SP capacity without contributing equivalent revenue. But if you see change as opportunity, the projections of overwhelming future video growth is the potential “mother lode.”

The challenge is finding ways to monetize video traffic. This can be done by breaking out of traditional mindsets and adopting a two-sided business model – serving consumers as well as customers and business partners.

On the business-to-consumer side, this often means launching next-generation services that integrate web content with their traditional television or mobile services. Increasingly, these services are popular with consumers aged 30 or younger, and can positively differentiate service providers that offer them. Examples of these new services in the TV and mobile arena include user-generated videos, video-chat-enhanced social networking, and role-playing games. Tying these together with program-themed merchandise creates a new and profitable revenue stream for SPs.

On the business-to-business side, digital content providers need better and more cost-effective ways to deliver high-quality video to consumers.  Additionally, we see web and media players seeking value added capabilities that enhance their value proposition to end customers and advertisers. Examples of these services include media data centers, content transcoding, and targeted ad insertion.

If you still need convincing, industry estimates put the potential of implementing this business model at US$1.2 trillion in 2017 in Western Europe and North America alone. For more detail on the two-sided business model, see the Cisco IBSG paper, “Exploring Two-Sided Business Models for Service Providers: Creating Profitability Through Innovation.”

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