Convergence is back. In the mobile age, telcos need content

Across the TMT sector, convergence is back in a big way. The early 2000s were packed with mega-mergers like AOL and Time Warner, and the cross-market consolidation that saw the emergence of integrated offerings like Virgin Media.

Things quietened down after the financial crisis, but the last couple of years have seen a raft of big telecoms providers making moves back into the media.

From BT’s acquisition of Champions League and Premiership rights, to Verizon’s recent acquisitions of both AOL and Yahoo!, and now AT&T’s proposed acquisition of Time Warner, telecoms companies can’t get enough content right now.

Now, AOL’s merger with Time Warner isn’t remembered particularly fondly by many people, so what’s changed?

The obvious point is that traditional telecoms revenues (even in mobile) are on the decline. Media companies offer access to a large and loyal customer base, a vast amount of data, and of course advertising revenues.

The big game-changer here, I suspect, is the rise of online streaming, and I’d be amazed if there weren’t several telecoms companies taking a long look at the likes of Netflix right now. Meanwhile, AT&T’s acquisition of Time Warner gives it access to huge franchises like Harry Potter and Game of Thrones.

With connected TVs and mobile devices rapidly becoming the default mode of viewing for millennials (as well as some older consumers), expect these worlds to move even closer together in the near future.