Why Content is King

Pokemon Go Demonstrates Clout of Sought After Content

By Damien Chew

With half the world’s population now having a mobile phone subscription, up from 20% ten years ago, mobile has transformed the consumer experience, with location-based services the norm.

Playing Pokemon Go in Montreal.

6 July saw the launch of Pokemon Go, a free to play location-based augmented reality game, which reboots the original 1996 game by Nintendo. With the launch still only a few weeks ago, it can already be seen that interest in the game has transcended the millennials who remembered it first time around. Some industry estimates say it has already become the biggest mobile game in US history, with over 75 million people downloading it globally.

By 19 July Nintendo’s share price had doubled on the back of the popularity of the game. Then on 25 July, when the company issued a statement to clarify that it did not make or own Pokemon Go, its shares dropped by the most since 1990, losing 18% in one day. This graphically illustrates the power of owning sought after content.

The bundling of triple- and quad-play services can pool fixed-line, mobile, internet and TV together. As a result, companies with good market share positions can leverage content to not only protect their subscriber bases by reducing customer churn but also, crucially, grow subscribers. In Europe, the recent deal by Vodafone and Liberty Global to merge their Dutch operations into a joint venture is a case in point. By scaling up, companies can capitalise on greater efficiencies to develop, purchase or license their own content, as well as ensure it is delivered in the highest technical quality to give the best consumer experience.

By combining Liberty Global’s Ziggo cable network with Vodafone’s mobile operations, the companies can be more competitive in providing converged services while increasing their capacity to gain access to attractive content. When the JV was announced back in February, Mike Fries, Chief Executive Officer of Liberty Global, highlighted the rationale being to tap into “.. rising demand for lightning-fast broadband speeds, the coolest digital TV platforms and apps, and seamless 4G wireless connectivity.”

BT Group’s acquisition of the UK’s largest mobile network operator, EE (completed at the start of this year) is another example of the quad-play approach to best leverage content over multiple platforms. In July, BT announced that EE pay monthly customers could get 6-months free access to its BT Sport App, which includes exclusive UK broadcast rights to UEFA Champions League football. To put the appeal of the Champions League into context, the 2014 final drew a global audience of 380 million viewers, while Super Bowl XLIX drew 114 million viewers, itself a record for US television.

In January, BT Sport trialled the use of virtual reality at an NBA basketball game between the Toronto Raptors v Orlando Magic which let viewers watch the game from different vantage points at the O2 stadium in London. Commenting at the time Jamie Hindhaugh, chief operating officer of BT Sport and BT TV, said “.. We’re always looking for new ways to bring viewers closer to the heart of sport. It’s clear that VR provides some truly amazing opportunities to do just that.”

Telecom and media companies are growing ever more adept at harnessing our demand for content through bundled services. As such, we can expect the increasing use of virtual or augmented reality to let subscribers be at the ‘big match,’ a music festival or enhance their game playing experience online. While Pokemon Go is a free to access game, and it remains to be seen how Niantic, Inc., the game’s developer, fully monetises its popularity, this summer’s craze again underlines why content is king.

Conclusion

As consumers, we are all spending increasingly more time online. Ofcom, the communications regulator for the UK, found that the average adult internet user spends over 20 hours online per week with smartphones now the most popular way of accessing the web. Be it Pokemon Go or UK Premier League football broadcasting rights, telecom and media companies are constantly looking to evolve the way they can develop and deliver content. Augmented and virtual reality are the next steps in this journey.

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