Content Settlements: Are the operators in control?
Content and data services are fast growing areas among CSP offerings and are a climbing source of revenues. Profits made by CSPs from content services ranges around 60-70% of the cost of sale. Though there is the occasional threat, mostly around reduction in Revenue shares due to an increase in regulatory charges, this market cannot be neglected.
Operators are now seeking to deploy sophisticated “User Engagement” based models in order to ensure partners/content owners are paid based on the actual consumption of the service and not just based on subscription, thereby determining the actual value addition that the services in question provide.
While operators acknowledge the potential in the VAS market, many are struggling to manage the operations when it comes to content billing and settlements. The sheer growth on Content and VAS offerings and increase in number of players in the market, content billing can no longer survive on Microsoft excel and access based manual computations.
Although the retail billing of content services may be based on their offering structure, like Subscription based billing or event based / on-demand billing. The Interconnect settlements prove to be a greater challenge. Due to a multi-party environment, it is essential to calculate the Revenue share per party keeping in mind the margin which the operators intents to earn. Some of the common models which govern the agreements between CSPs and their Content Owners are the tier based agreement; slab based rating; flat revenue sharing; subscriber based revenue sharing.
Content market is not a static business environment. New services are launched regularly. The on-boarding (or off boarding) of a new offering should not be a cumbersome. The ever changing contracts between the operator and their partners need the settlement solution to be extremely flexible. One of the vital criteria of the system should be the ease with which it can be configured in order to positively impact the go to market time.
While future of content seems to be bright, Operators need to be mindful that:
- “OTT players are growing” and here to stay
- “All you can eat” usage models is coming to an end and “Capped usage” models will prevail
- “Targeted” content era begins