War of Platforms hits Europe
A recent Study of Solon Management Consulting underpins the new reality Telco and Broadcast Executives have been facing in Europe for quite a while already: The Competition among them has substantially increased, as they leave their traditional business segments to steal revenues from the others domain. Driven by first recognisable effects of device-convergence, the trend has finally reached the most attractive european market, Germany.
Over here, being in a so called DSL-Market, ex-monopolists Deutsche Telekom had an easy game for quite a while. This ended abruptly with new directives of the Regulatory Authorities and the upcoming of new competitors and substitutes, as the newly formed cable companies are. To cover declining revenues from traditional businesses, both industries are following the same logic, which can easily be described with one word: Differentiation. This differentiation strategy is carried out in their Triple Play Services offerings.
Solon´s resume on this development of raising competition is overall growth of the Broadband markets in Europe and Germany, as you can see on this chart:
However, despite to all approximation between TV, Internet and Telefon and it´s well-known conequences to the structure of those industries, Solon concludes that the German War of Platforms will be less fierce. They argument, that Cable-Suppliers will be limited within their expansion to the telco market due to unlikeliness of them upgrading their networks massively.
And the other side will have to expect limitations based in the structure of Germany´s over-saturated TV-Market, as well as by new technical developments. My (very speculative) point of view to this is different: I think after a time of stagnation and observation of other markets around us, the notorious scepticism, which slows us down in so many areas these days, will be overcome here. Regulators and the anti-trust authority will recognize, that there´s no downside in having a strong cable player. Then, having reached a higher degree of consolidation or at least intensive strategic cooperation, attractive triple play packages, accompanied by new products will be available broadly, giving a real alternative to todays narrowed choice. On the other hand, for tv´s traditional business areas (and concluding for the structure of conventional bouquets and their suppliers) i´m far less optimistic. Although the discussed over-saturation of free to air broadcast will have a strong influence to new services, i believe in a big potential, especially in premium pay tv / on-demand contents. Business models in that area will be much more fragmented within an foreseeable period casinos in australia. This results in a number of opportunities for other players in the distribution of entertainment contents, taking advantage out of new hybrid technologies and penetration of home entertainment networks. Such technological driven market development will be strengthend by user/viewers demand on more specific and indivualised entertainment consumption, even in “lean back mode”. Since there is also a high pressure from the CE industry to establish new types of products, i can´t follow their assumption, that these tendencies will hit “premium pay tv and interactive services” solely. Instead i expect a much broader, fundamental shift in viewing behaviour and tv-consumption. But: Time will show, like all of us i´m excited to watch it.
Find the full study with lots of interesting viewpoints and details about today´s competiton between the platforms here.
