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The State of Mobile Video 2016
UHD over mobile, 5G trials, and LTE Broadcast top the trends in mobile video
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Even with smaller screen sizes, limited battery life, and the high cost of data, streaming video on mobile devices continues to push data consumption to new heights. Mobile data traffic in Q3 2015 was 65% higher than the year before, according to Ericsson’s latest biannual Mobility Report. In 2015, video accounted for around 50% of mobile traffic, and Ericsson expects that figure to reach almost 70% by 2021. The Cisco Visual Networking Index goes even further, predicting that 72% of mobile traffic will be video in 4 years.

Ericsson also notes that in many mobile networks, up to 70% of cellular-delivered video traffic emanates from YouTube, while Netflix's share can reach up to 20% in markets where it is available.

Data traffic per active smartphone in North America will grow from 3.8GB to 22GB per month by 2021; in Western Europe, the increase is from 2GB to 18GB per month. The internet of things (IoT) will also light up cellular networks over the next several years. In total, Ericsson expects 28 billion connected devices to pour data onto the world's networks by 2021.

Mobile Advertising Rides the Video Wave

With all this traffic it's no surprise that mobile advertising is expanding fast. Freewheel Video's Monetisation Report revealed that video ad views and video views are each rising at 28% year-on-year, with long-form on-demand and live content up 30% and 113% in Q3 2015, respectively.

According to the IAB U.K., the U.K.'s total digital ad spending grew 13.4% to £4 billion in the first half of last year, while mobile ad spending increased 51%, accounting for a nearly 80% share of the rise in digital ad revenues. Internet ad revenues in the U.S. reached a landmark high of $27.5 billion in the first half of 2015, according to the IAB. Mobile has gone from less than 5% of digital ad revenues in 2011 to 30% in 2015—a steep growth indicative of the shift toward mobile viewing. AOL's 2015 European State of the Video Industry Report revealed that more than half of buyers plan to increase mobile video ad spending in the coming year.

"We're witnessing a seismic shift in consumer behaviour to the always-on, connected consumer," says David Silverman, a partner at PricewaterhouseCoopers, which helped compiled the IAB report. "As a result, we've seen social continue to fuel the growth of digital, particularly with respect to mobile and video."

Mobile video is also driving growth in the programmatic space. According to the IAB U.K., the programmatic share of mobile ad sales soared to 64% in 2014—with almost half of online display ads, worth just shy of £1 billion, being bought programmatically. Nearly all video ad buyers (98%) in the European markets are buying ads programmatically, according to AOL, with approximately 40% of their total video ad budgets now being channelled this way. The trick going forward is to link digital programmatic sales with linear broadcast sales. That's an emerging trend, though there's still a lack of faith in automated real-time bidding.

4G Rolls Out

With a full year's head start on its competitors, mobile operator EE continued the charge into 4G across the U.K. By the end of 2015, EE had more than 95% of its customers covered by 4G data, and was pushing the faster 4G+ network (its brand of LTE Advanced with speeds up to 150Mbps) in London and other urban areas to allow for more capacity and improved reliability for streaming.

Launching 4G+, EE analysts discovered that video downloading and streaming on-the-go is the fastest growing activity for customers. Nearly 60% of data used on 4G+ smartphones is on video. Transport hubs such as London Victoria and King's Cross are the busiest 4G+ sites, as people download shows for train journeys. The operator also plans to accelerate the rollout of 4G+ across Europe.

In contrast, O2 and Vodafone are set to miss their 4G rollout targets. Both had targeted 98% coverage by the end of 2015, a goal set in 2012 and intended to be well ahead of the government-set goal of 98% by 2017. Both operators are at risk of missing that deadline and stand at around 70% coverage at year's end, even with O2 spending £1.5 million a day to improve its network.

Consolidation Beckons

The U.K.'s mobile operator market is set for a major period of consolidation as the £12.5 billion takeover of EE by telco BT Group was cleared by the U.K.'s Competition and Markets Authority in October. The deal more than triples BT's retail customers, adding the 10 million it already had to EE's 24.5 million direct mobile subscribers.

Meanwhile, Three owner CK Hutchison is on the verge of a £10.5 billion buyout of O2 from Telefonica. This would create the U.K.'s largest mobile operator, with 33 million customers, and reduce the U.K.'s mobile operators to three.

Vodafone has been concentrating on building out a quad-play to go head-to-head in the competitive U.K. market with the likes of Virgin Media, EE/BT, Sky, and TalkTalk. In June, it launched a home broadband service, to be followed this spring by a pay TV offering. Vodafone was already Europe's fourth-largest broadband provider, with 11.3 million customers in Spain and Germany. Whether or not it will be able to tempt U.K. viewers away from rival services will likely come down to the content it can offer viewers.

UHD Over Mobile Trials

BT consolidated its position as a substantial competitor to Sky in the U.K. pay TV market this year, landing exclusive Champions League and Europa League football rights to sit alongside the bundle of Premier League soccer matches it shares with Sky. It also launched the first European Ultra HD sports channel.

While Sky is likely to follow into 4K in 2016, now that its new SkyQ set-top boxes are being introduced, BT might be looking to add UHD streaming to mobile to its portfolio, via the merger with EE. The mobile operator championed its tests of sending UHD signals to handsets in 2015, using V-Nova's compression technology, Perseus. One trial involved streaming UHD video to a 65" screen at 50p in a crowded area of London during rush hour. Matt Stagg, EE's head of video strategy, says the trial showed that "even in a dense urban environment, we can stream UHD content over mobile when we combine these technologies."

Despite only really directly benefitting larger screens, a 4K capable service could still help EE's mobile network. "If you can build a mobile network capable of supporting 4K, then your customers' HD and SD video experience will be fantastic," Stagg says. "As well as adding more bandwidth, we're looking at ways of delivering video more efficiently in challenging environments such as densely populated urban areas V-nova also scored a first when Perseus contributed links to the live UHD transmission of the Real Madrid versus Barcelona clash in November for Canal+ Liga channel via Telefonica's Movistar+ FTTH service.

5G on the Launchpad

This spring sees the official launch of the fight for 5G as U.K. regulator Ofcom launches a fresh spectrum auction. A total of 190MHz of high-capacity spectrum is being made available in two bands (2.3GHz and 3.4GHz) via the auction. The 4G bids in 2013 raised £2.3 billion for the exchequer.

South Korea and UAE markets are expected to take a global lead on 5G, as networks that meet the ITU's IMT-2020 standards rolling out starting in 2020. Ericsson's Mobility Report predicts 150 million 5G subscriptions by the end of 2021.

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Mobile video traffic keeps rising at a rapid rate, leaving operators struggling to keep up with demand. Meanwhile, the U.K. is falling behind on broadband connectivity.