More Telecoms Acquisitions And Alliances ‘Likely’ As Market Converges

Communications providers will need to forge new alliances, secure exclusive content and make acquisitions if they are to keep up with the trend of consumers receiving multiple services from a single company, according to analysts.

CCS Insight says that by the end of 2019, 85 percent of UK households will receive at least two services from the same provider. It is expected that 12 million homes will sign up for ‘triple-play packages’ in 2015 and 1.5 million will opt for ‘quad-play’ services – a figure which will double next year.

This trend is fuelled by a desire for convenience, value and video services as well as ongoing consolidation within the industry. BT is in the process of acquiring EE, while Three’s parent company wants to buy O2.

Read More: How Telcos can keep up with OTT providers

Consolidated market

“Over 40 percent of UK households currently do not subscribe to pay-TV services: this is a huge opportunity,” said Paolo Pescatore, director of multiplay and media at CCS Insight. “BT has shown the way with the success of BT Sport. It’s now using its sport channels to drive up subscriptions to BT TV among its existing customers. It’s also targeting Sky TV customers who enjoy watching sports, while others like Virgin Media are positioning themselves as aggregators.

“We will see similar battles in other types of programming beyond sport, fueling further competition. We believe programmes, especially exclusive material, will be a key weapon in providers’ quest to secure customers. Those that offer a vast array of programmes will be better placed to succeed.”

However Pescatore warns that although exclusive content might draw in more customers, the increased availability of fibre will boost demand for over the top (OTT) services like Netflix and Amazon Prime.

“These on-demand services pose a serious threat to telecom providers’ aspirations in video; the latter must react quickly and be able to move at Web speed to counter this challenge.”

Sky, whose strength has traditionally been in satellite broadcasting, offers Sky Go to its TV customers and NOW TV, its own OTT service. BT has also looked to expand beyond live sport with the launch of AMC.

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