Spanish mobile network operator Telefonica has set up an audiovisual content-production unit called Telefonica Studios. Under that heading, the company plans to produce more than 25 films and several TV series over the next three years. Telefonica Studios will initially focus on the European and Latin American markets and plans to eventually expand its reach to English-speaking markets, as well.

Tarifica’s Take

We have been urging providers for quite a while now to do everything possible to go beyond their traditional roles in order to ensure that they do not end up as “dumb pipes,” that is, as mere conduits for data, less and less distinguishable from each other. We have stressed that providing value-added, consumer-targeted content is a key way in which to accomplish this goal, and that entertainment programming, which is increasingly consumed via mobile devices, is one of the best opportunities in this realm. With that in mind, we think Telefonica’s move is a very bold step in the right direction.

We have generally advised operators to consider partnerships with content developers, on the logic that MNOs lack the experience and resources to create entertainment content—whether it be games, music, or video—entirely on their own. However, very large operators that dominate their national markets and/or operate on a global basis may well have sufficient capital and the ability to defer ROI so that it makes sense for them to develop content entirely on their own and keep all the revenue for themselves. By forming a team to create such large-scale, complex projects as films and TV series—forms of entertainment that are already being widely watched on smartphones and tablets—Telefonica is taking a huge step into new and potentially lucrative territory. While it’s too early to say whether the plan will be successful, we applaud the company for its ambition and vision.