Strategy and management consulting in Telecom and Media

CONTENT STRATEGY

Glossary

ARPU :
Average revenue per user (ARPU) is used by (fixed-lined or mobile) operators to calculate the revenue generated by a customer per month. ARPU includes not only the revenues billed to the customer each month for usage, but also the revenue generated from incoming calls, payable within the regulatory interconnection regime. ARPU reached 32,5 EUR in 2005 by European mobile operators (vs 65 EUR in Japan)

Besides Internet access, ISPs are looking to develop content that allows them to fully utilize the technologies available. Therefore the development of IPTV content, Web Radio, webgaming and other services represent significant opportunities for ISPs :

  • Revenue growth: revenues from the sale of content via Internet access can increase ARPU.
  • Differentiation: content, due to its potential exclusivity, can impact both customer acquisition by ISPs that invest, as well as customer satisfaction and churn.

Also, major operators have developed relatively ambitious content strategies :

  • Orange France invested in TV rights (for € 203 million / year until 2012) for the partial broadcast of the French Football League 1 and distribution of content through its channel “Orange Football” and its Orange cinema promotion
  • Although active in the distribution of various content (music, games, audiovisual content, sports and 'infotainment'), SFR developed an especially strong position around the distribution of music with more than 1 million customers who subscribe to an offer including a flat rate music service
  • Historically focused on the business of content distribution including premium sport and films, SKY, the leading pay TV platform in the UK is also strongly positioned as an ISP and offers access and content to its DSL customers

However, several problems still hamper the development of clear strategies by ISPs :

  • The blurring of the legal exclusivity of distribution: the distribution of exclusive content such as a premium bundle with Internet access is a relatively new practice that calls into question the hegemony of the major media groups.
  • Economic profitability of the strategies: selling content allows ISPs to increase ARPU, but it often requires major investment, particularly in relation to content rights acquisition.
    The economic challenges of such deals can be faced by ISPs with a critical mass of subscribers but can also sideline players that do not have a large enough customer base.

Greenwich Consulting is already deeply experienced to helping ISPs and media companies address these challenges and believes that that the further development of ISP strategy around content will be a major issue in coming years