Creating a Mass Consumer Market for Videotelephony: Opportunities and Challenges

Published by: Analysys Mason

Published: Mar. 31, 2006 - 62 Pages

Table of Contents

1 The potential mass market for videotelephony is untapped

1.1 Fixed videotelephony is finding a niche as a value-add

1.2 Skype and software-based videotelephony applications currently dominate the fixed videotelephony market

1.3 Mobile videotelephony has a large addressable market through 3G but costs remain prohibitively high

1.4 Combined fixed-mobile solutions create new applications

1.5 Network equipment vendors are taking advantage of new technology and standards

2 Technological barriers to videotelephony are coming down

2.1 Call control standards are well advanced

2.2 Coding standards are making strong progress

2.3 Video resolution can be traded for bandwidth

2.4 The IETF is working on ways to traverse network address translators and firewalls

2.5 IP networks and devices will improve multimedia applications

2.6 Technical advances will continue to improve market opportunities

3 In the long term, videotelephony should be considered a core operator service

4 Videotelephony must be sold as a high-quality, integrated experience

4.1 Videotelephony is strengthened by integration of devices and services

4.2 Bundling videotelephony will reduce the discernible cost to the end user

4.3 Latent demand for videotelephony should not be assessed on the basis of specific needs for visual communication

4.4 Videotelephony has two key routes to market

4.5 Over-hasty launches of videotelephony may backfire

5 Videotelephony usage will grow, but operators must be inventive to capture value

5.1 The adoption of videotelephony is dependent on a large number of variables

5.2 Adoption of videotelephony will follow on broadband growth in fixed and mobile networks

5.3 Revenues from videotelephony will be significant by 2011

5.4 If usage of videotelephony takes off, operators may struggle to capture its value Actions

Figures and tables

Figure 1.1: Voice revenue in selected European markets, 2003-5

Figure 0.1: Use of fixed and mobile videotelephony, Western Europe, 2006-11

Figure 1.1: Timeline of the recent development of videotelephony

Figure 1.2: Example videotelephony devices

Figure 1.3: Estimated proportion of broadband households using videotelephony, September 2005

Figure 1.4: Estimated proportion of 3G subscribers using videotelephony, September 2005

Figure 2.1: Timeline of codec implementation

Figure 2.2: Comparison of the frequency distribution of xDSL technologies

Figure 2.3: Increasing upstream bandwidths on wireline and wireless networks

Figure 2.4: Bandwidth reduction for coding standards

Figure 3.1: The position of videotelephony in core communication service portfolios

Figure 4.1: Roadmap for fixed videotelephony

Figure 4.2: Roadmap for mobile videotelephony

Figure 5.1: Penetration of videotelephony in 3G subscribers in Western Europe, 2006-11

Figure 5.2: Comparison of fixed videotelephony users in Western Europe, 2006-11

Figure 5.3: Videotelephony service revenue in Western Europe, 2006-11

Figure 5.4: Fixed videotelephony handset revenues, 2006-11

Table 1.1: Examples of standalone fixed terminals

Table 1.2: Examples of set-top boxes

Table 1.3: Converged videotelephony services

Table 1.4: Network equipment vendors in the videotelephony market

Table 2.1: Reduction in bit-rate in encoders

Table 2.2: ITU formats for videoconferencing

Table 2.3: Services supported by SIP and IMS-enabled networks

Table 4.1: Examples of mass-market applications for videotelephony

Table 5.1: Forecast assumptions for 2011

Abstract

• How have commercial, technical and standards issues affected the development of the videotelephony market? Are these issues resolved?
• What approaches can operators take to videotelephony?
• What lessons can be learned from previous services?
• How can videotelephony be promoted to reach a mass market?
• How can revenues be extracted from videotelephony?
• What videotelephony devices, standalone or integrated, will be most popular?
• What is the value of the current mass consumer videotelephony market for services, devices and network equipment? How will this change over the period to 2011?
• Is it better to wait for technology to improve still further or to launch now?

• Operators: assess the status of the market, the technology, the consumers and the potential for revenue gain
• TV broadcasters: understand how videotelephony can add value to TV services and reduce churn
• Network equipment manufacturers: appreciate what operators offering videotelephony services need from their networks
• Vendors: see how demand for videotelephony services is likely to evolve
• Regulators: understand how videotelephony fits with IPTV, which is already a regulatory grey area
• Investment banks: assess the potential from investment in videotelephony services

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