According to Value Partners, a leading managing consultancy firm in the Middle East specializing in media and telco trends, the continued growth in video on demand (VOD) in the Middle East delivered over the internet is inevitable as consumers are increasingly expected to control their viewing.  

 

Value Partners suggests that growth in demand for VOD calls for a coalition of infrastructure providers, broadcasters and regulators, to examine the ability of the Middle East’s broadband networks to deliver VOD with the quality of service required to satisfy consumers. Traditional Telcos acting as Internet Service Providers (ISPs) and content/application providers need to adapt their technical and business models to meet future consumer demands, and the role of future net neutrality legislation in shaping this quality of service required to satisfy consumers of VOD. 

 

“As more online video services are launched and internet VOD moves to the TV, audiences in the Middle East increasingly expect internet VOD to match the reliability of broadcast TV,” said Santino Saguto, Partner, Value Partners.  

 

“VOD is the most technically challenging of all services to deliver with guaranteed QoS. Today, to stream standard definition (SD) video without interruptions requires a consistent speed of around 1.5 Mbps for the duration of the video. This is more demanding than other applications such as surfing and email, which are bursty and less time critical; or internet telephony which requires lower bandwidth.” 

 

Over the next few years, Value Partners expects that compression technology will reduce the speed required to deliver SD quality internet VOD. In conjunction, infrastructure upgrades will increase the speeds achievable by homes in the Middle East. 

 

“Over time, improvements in compression, buffering, and use of progressive download technologies in the Middle East will reduce the speeds required and allow for short fluctuations in speed during streaming,” continued Saguto. “Internet VOD is likely to remain the most extreme test of the network infrastructure’s ability to deliver consumers guaranteed QoS services.”

 

 

With personalization and differences in user interface driving loyalty, users are likely to default to a small number of favorite sites. VOD content providers, such as YouTube and Seesaw, will compete for users based not only on content but also on picture quality and service reliability. Furthermore, as internet VOD moves to the TV, reliability becomes more important as TV VOD needs to match the experience of broadcast TV, PVRs and DVDs. Opportunity in the Middle East is also linked to provisioning of local content as well as regional websites or regionalization of existing global websites. 

 

Telcos are aware they are critical to delivering uninterrupted VOD streamed over the internet. They control the majority of the delivery infrastructure. With the right investment in network infrastructure use of intelligent network management and traffic prioritization techniques, and appropriate partnerships across the value chain, they will be able to provide guaranteed QoS solutions to consumers and content providers. Furthermore, the nature of telcos’ relationships with their customers means they are best placed to work with customers to trouble-shoot any pinch points within the customers. 

 

Major telcos are also seeking to take the market opportunity opened up by guaranteed QoS technologies one step further, by moving into triple-play, offering customers a bundle of pay TV, broadband and telephony. This would help them extend their relationship with customers, grow Average Revenues Per Users (ARPUs) and reduce churn. Countries as UAE and Qatar are also enjoying the availability of extensive FTTH infrastructure to deliver high speed broadband and top QoS. 

 

 

In its purest form, net neutrality is the equal treatment of all traffic in a network, so that consumers can have non-discriminatory access to all content, services and applications. However, it is now widely recognized that ISPs need to manage the traffic on their network to optimize network performance. The debate currently centers around defining the acceptable level of network management. There is clear consumer demand for VOD. However, business models are nascent and their viability on a standalone basis is as yet unproven. Furthermore, delivery of VOD services over the open internet is technically complex and generally involves multiple stakeholders controlling different parts of the delivery infrastructure.   

 

For a guaranteed consumer experience collaboration between content/application providers and telcos/ISPs is required. The future development of the internet VOD market depends on the outcome of negotiations between content providers and telcos/ISPs around the division of responsibilities and sharing of value.