Grow VC Group
  • Home
  • Group
  • Team
  • FAQ
  • Join Us
  • Trainee Program
  • Contact
  • News

Streaming media game: threat or opportunity

7/22/2018

Comments

 
​Telecom carriers have looked for a role beyond the bit-pipe for years. Now it looks like the evolving TV and content business is a new game that they want to participate in. Netflix and Amazon are leading the streaming business globally and have stepped to produce their own content too. Now there are signs that some carriers want to enter this business. But consequences can be complex to evaluate.

In the US AT&T has tried to merge with Time Warner, but the merger is now a legal battlefield. There are also other similar activities around the world. Maybe the latest one is that Sweden's Telia is talking to acquire Bonnier Broadcasting that owns TV channels and production in Nordic countries. Vodafone just acquired cable networks in Central and Eastern Europe from Liberty Global. Some operators are also in the pay-TV business and even started to produce their own content.

The timing is interesting for both parties. Carriers are still looking for value-added services. At the same time broadcast media companies have really started to feel the impact of Netflix and Amazon and other content from the internet. They lose viewers, and advertising money follows.

For a longer time it has looked like streaming content is one interesting business opportunity for carriers. People are now ready to pay for good content. An additional opportunity is to bundle data and content, such as by offering ‘free data connections’ for a carrier’s own content services. It is a way to tie in customers.

In principle, this sounds good. But as the AT&T and Time Warner case also demonstrated, this kind of vertical mergers can be complex for competition and consumers. We have several questions, like:
  • How to keep fair and transparent pricing for content and connectivity, so that consumers can have options to select other content providers, and other content providers can offer their content to all consumers?
  • Is the carrier able to prefer its own content, e.g. offer better quality of service for it?
  • Can a Media-Carrier be a gatekeeper for all other content to consumers?
  • Does this allow a few dominating actors to prevail each market?
  • Can this be an additional threat to the open internet and net neutrality?
When telecoms competition was emerging globally, especially in the 1990s, regulators wanted to separate owning network infrastructure from services in the network. For example, a broadband provider can rent connections and last miles from another carriers. This was designed to separate vertical functions from each other. Now we talk about a similar situation, but on another layer: content and data services.

How well carriers are able to run this business in practice is its own question. Carriers’ track records in expanding to other businesses is not very promising, and often they ramped down or divested non-core activities. Carriers must at least accept that the media business is very different business from the network infrastructure business.

Globally it looks like there will be strong global content companies, like Netflix and Amazon. At the moment, it looks like the vertical mergers are not really a threat to them, they are strong enough. The media and carriers' mergers can be a bigger threat locally and, for example, in certain language areas. At the same time, someone can argue that Netflix and Amazon could become globally dominant players, and it is actually good to get serious competition from Media-Carrier firms.

Disney’s acquisition of 21st Century Fox is another example of media consolidation. The competition authorities have commented that horizontal deals are not such a threat as the vertical ones for the competition. But it also indicates that media and content firms are preparing for a new era of competition.

There is an old saying that the TV content and distribution business is an example of how one strategy can work only for some time. The past has shown that if a winning strategy seems to be to own cables to customers, then a distributor gets the rights to such a content that every one wants and they start to dominate the value chain, until the best content producers start to dominate it by dictating the terms of the market. So, it is a never-ending pendulum in the value chain. But if you own the whole value chain, which can be the result of vertical mergers, it will be very different game, or no game at all.

The article was first published on Telecom Asia.
Picture
Comments

    About

    Est. 2009 Grow VC Group is building truly global digital businesses. The focus is especially on digitization, data and fintech services. We have very hands-on approach to build businesses and we always want to make them global, scale-up and have the real entrepreneurial spirit.​

    Read the latest Grow VC Group  FinTech, distributed and crypto finance, and blockchain report
    Read the AI, Asia and FinTech report - including comments about potential trade wars.
    Download

    Research Report 1/2018: Distributed Technologies - Changing Finance and the Internet 


    ​Research Report 1/2017: Machines, Asia And Fintech:
    Rise of Globalization and
    Protectionism as a
    Consequence


    Fintech Hybrid Finance Whitepaper

    ​Fintech And Digital Finance Insight & Vision Whitepaper


    Learn More About Our Companies:
    • Difitek
    • Prifina​
    • RE Bearing
    • Token Index Fund
    • Startup Commons
    • Lost in Translations
    • Robocorp
    • Nodi Liber​

    Archives

    January 2023
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    October 2020
    September 2020
    July 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    September 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016

    Categories

    All
    Difitek
    Grow VC Group
    Robocorp

    RSS Feed

Digital Intelligence Globally
Picture
© 2009-2023 Grow VC Operations Ltd. All Rights Reserved.
  • Home
  • Group
  • Team
  • FAQ
  • Join Us
  • Trainee Program
  • Contact
  • News