OTT collaboration: Why the West is missing out on a €2b opportunity?

Western companies are missing out on a 15-fold increase in gross profits due to an approach to the Over-The-Top [OTT] community that is outdated and needs to be opened up.

AsiaInfo, China’s largest telecommunications software and services company, worked out that western companies could access some €2 billion [£1.56 billion] in gross profits over the next two years if an open approach to the OTT community was widely adopted.

Under the current system, collaboration with the OTT community takes place on a case-by-case basis and it’s projected that this will only generate €160 million [£125 million] in gross profits over the coming three years.

Giving OTT partners direct access to IT assets through a strictly controlled open collaboration platform, meanwhile, would reduce the operating costs linked to each partnership and bring more partners into the ecosystem. The better value for money and increased revenues this brings to each collaboration would lead to the 15-fold increase to €2 billion [£1.56 billion] in gross profits.

“It is quite simple,” said Northstream’s CEO, Bengt Nordström. “Our modelling shows that the potential lies in the operators’ ability to achieve the economies of scale required and quickly add and manage partnerships across those three growth criteria. As long as a manual or case-­by-­case model is adopted costs remain high and growth remains limited.”

Northstream went on to identify three key drivers of profitability that are the collaboration platform lets operators grow the number of partners, it increases the variety of partnership scenarios, and boosts subscriber uptake of partner-based offers.

The potential of OTT services has been shown by the fact that Facebook plundered billions on WhatsApp and it is changing the entire landscape of the telecommunications space into one that sees communications service providers become digital service providers.