Media, entertainment and broadcasting content represents an enormous market, which is underscored by the $109 billion price tag that AT&T is willing to pay for Time Warner.
Between 2010 and 2016, the number of smart phone users grew 331%, from 62.6 million to more than 207 million. Now, with a saturated market and smart phone growth projected to slow to just 28% over the next five years, wireless providers have to look at other ways to grow, and AT&T has found a brilliant solution: through the ownership of licensed content.
As technologies converge and more and more people are using mobile devices for content consumption, merging premium content from traditional sources like the big screen and television with telecommunications makes a lot of sense.
By owning the content as well as the network that is bringing the content to the devices, AT&T will be creating a whole new revenue stream with unprecedented potential for growth. Among other things, it will launch a new frontier in bundled plans, to include add-on subscription services and on-demand viewing from AT&T’s content library, which will include all of the original content from HBO, CNN, TNT, TBS and Warner Brothers. This consolidation of services will pull users from other OTT providers due to the sheer convenience of access.
While opinions differ on the subject, from Forbes calling the acquisition “A Rare Deal That Makes Economic Sense” to Fortune reporting it as a “Huge Mistake,” the unavoidable truth is that content is king, and with content comes the complication of distribution rights. Tracking distribution rights for formats, devices, and regions of licensed content as well as royalty payouts to contributors will be a whole new territory for AT&T, or any of the emerging telecom/media partnerships. Verizon faces a similar learning curve with its recent acquisitions of AOL and Yahoo.
Network providers will not be the only ones heading in this direction. Hi-tech device and software manufacturers as well as content providers are also eyeing this as a growth strategy. Marriages between content libraries, streaming services, and the underlying broadcast management providers will continue, extending the complexities of IP distribution rights management into many more markets. Market players will need to adapt and blur business lines in order to remain competitive. This is likely to be a game changer.
Mobile statistics source: Statista