Telcos pursue marriage of interest with content creators

July 26, 2016 | 15:56

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The trend of telecommunication companies buying content creators has become more prominent, as more players from around the world jump on the bandwagon.

illustration photo - source internet

Yesterday, US telco Verizon announced buying the internet business of struggling internet giant Yahoo for $4.83 billion in cash. The deal, which is subject to approval by regulators and Yahoo’s shareholders, is expected to close in the first quarter of 2017.

Before Yahoo, Verizon acquired another content creator, AOL, for $4.4 billion. Yahoo produces television shows, like Community. AOL owns The Huffington Post, TechCrunch, and a variety of digital video assets.

Verizon’s purchase of content creators shadows a bigger trend of telecommunication companies working to reach more synergy with content creators.

In April this year, French multinational mass media company Vivendi and Italy’s Mediaset forged a pay-TV alliance, with Mediaset handing over an 89 per cent stake in its pay-TV business to Vivendi.

According to Mediaset, the deal will see the company enter “a big international pay-TV network.” However, the deal’s significance transcends pay-TV services. “You see AT&T buying DirecTV, Telefónica buying Via Digital, etc. The integration of telcos and media content creators is the present and the future,” news site variety.com quoted media mogul Tarak Ben Ammar, member of Vivendi’s supervisory board, who brokered the deal.

Vietnam is not outside of this world-encompassing trend. In January this year, Vietnamese telco MobiFone, which operates the second most popular mobile network in Vietnam, officially bought pay-TV operator An Vien and rebranded it to MobiTV in April.

Telcos like MobiFone benefit from synergy with content creators because they have access to a massive base of customers that is yet to be fully exploited. In Vietnam, where mobile penetration is already high and telcos have exhausted revenue from calls, texts, and data, telcos are dying to provide extra services to their subscribers in their battle for market shares.

According to MobiFone, MobiTV is going to integrate television and telecommunication, giving them the ability to provide new services to subscribers, such as highly interactive or higher definition TV programmes, original content, and new subscriber packages combining TV and mobile features.

Purchasing AVG helped MobiFone, which now has 40 million subscribers and remain competitive, especially when the other two major players in the market, Viettel and VinaPhone, are both providing mobile TV already. According to a representative, with this acquisition, MobiFone can earn more from advertising and cross-selling data. But the most important benefit from the deal is the information gained on the habits of customers across platforms that the company can now access and utilize to learn more about customers’ demands, and tailor its products accordingly.