Over-the-top dynamics – Digital disruption and market dynamics

Over-the-top dynamics – Digital disruption and market dynamics

Over the top dynamics

Over-the-top dynamics hits the TV space

Watching TV used to be so simple, or at least it seems that way in retrospect. First there were just a handful of networks. Then broadcast TV gave way to cable. But even as the number of channels multiplied exponentially, it was all still easy to understand, not to mention incredibly profitable.

But now the traditional TV industry is been disrupted by OTT, short for “over-the-top”. The acronym refers to video content delivered straight to the consumer via internet. The core disruptive concept is that the “pipe” created by the cable operators no longer provides the sole gateway to consumers’ television screens. Using software, like the apps on new “smart” TVs, or hardware, like Roku or Chromecast devices, any consumer with a god Internet connection can now bypass the disintermediated cable operators.

Over-the-top dynamics are also playing out in the mobile space

Over the top dynamics are also playing out in the mobile space, as consumers bypass mobile network providers to consume and share content.

Over the top dynamics are also playing out in the mobile spaceThink about messaging: Consumers relied on mobile phone operators to send text messages. Now they can circumvent the data cost of traditional text messaging by using such services as WhatsApp (owned by Facebook). But this is WhatsApp!

This is the application that just passed one billion monthly active users. That’s nearly one in seven people on Earth who use WhatsApp each month to stay in touch with their loved ones, their friends and their family.

WhatsApp provides a messaging app with a very simple user experience. But now the stakes for the world’s biggest messaging company are about to get much higher as it pushes through one of the most fundamental methods of communication out there: voice calling.

Though many consumers already make free calls on Skype, Viber or Apple’s FaceTime, WhatsApp’s calling service stands to be the most popular of them all simply because it has the highest single number of active users.

The legacy telcos are going to be saying good bye to even more of their diminishing calling revenue. The entire telecommunications industry will have lost a combined $386 billion between 2012 and 2018 because of OTT services like WhatsApp and Skype, according to Ovum Research.

Over-the-top dynamics - How companies like WhatsApp are radically reshaping industries

WhatsApp now 50% larger than global SMS:

Whatsapp now 50% larger than global SMS

Over-the-top messaging apps like WhatsApp are currently leading a paradigm shift away from traditional SMS and towards lower-cost and feature-rich alternatives. As the popularity of messaging applications continue to rise, expect to see further declines in SMS revenue on a global scale.

Overturn incumbents and reshape markets

Digital disruptors can be very dangerous because they grow enormous user bases seemingly overnight, and are agile enough to convert those users into business models that threaten incumbents in multiple markets.

WhatsApp illustrates well how a start-up can “use digital” to disrupt multiple revenue streams within an industry – or even multiple industries – with a single offering.

Digital disruption has the potential to overturn incumbents and reshape markets faster than at any time in history! Very interesting times ahead!

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About The Author

Torben Rick

Experienced senior executive, both at a strategic and operational level, with strong track record in developing, driving and managing business improvement, development and change management. International experience from management positions in Denmark, Germany, Switzerland and United Kingdom

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