Canadian operator Rogers Communications has announced increased smartphone access to popular TV series and live sports via Rogers Anyplace TV. This app, which currently provides selected TV content to subscribers on the move, will be upgraded, starting in the fall of 2013, to offer more live streams and on-demand programming. The new content will include hockey, soccer and golf games and entertainment series such as “The Big Bang Theory” and “The X Factor.”
While we have been skeptical about the ability of MNOs to cost effectively license programming from producers of quality entertainment (e.g., cable and broadcast networks, movie studios, sports leagues, etc.), we nonetheless believe such an approach can be worthwhile if operators are able to find the right balance between the license fees they have to pay for the content and the amount that can be charged to subscribers. Moreover, we foresee entertainment programming becoming an indispensable component of a mobile operator’s service mix and as such it will soon be imperative that such content is made available to customers. In fact, we do not believe it will be long before video entertainment comprises a quite sizable piece of the mobile-services pie.
In our view, the way for a mobile operator to do well at this game is to license the highest-quality content possible and to do so on an exclusive basis. Gaining such exclusive rights for a geographic region can be a great draw for prospective subscribers interested in that particular content. However, the costs will likely be steep, making it a challenge to generate an acceptable return on investment. From everything we see, the best chance to generate a healthy ROI is to license sports content, as sports fans appear to have an insatiable appetite for following their favorite teams and are therefore less price sensitive than most other people. Whatever the genre, it is clearly in the interest of operators, especially larger ones, to use their financial resources to license quality video content. The combination of exclusivity and proper pricing can make it a worthwhile effort in the long run.