Why the content business might not be the answer for the European telecoms02 Jan, 2013
With telecoms everywhere in Europe are trying to become more than “data pipes”, paid content like video on demand (VOD) or subscription VOD is one direction that they’re looking in. But the example of French telecom Orange shows that it’s just not that easy to move into another business model successfully.
Orange moved into the content business in 2008, trying to rival Canal+. But in 2011 it (again) posted huge losses in its content business, according to data released by the the French Conseil Supérieur de l’audiovisuel, and as reported in Les Echos.
Orange’s subscription sports and movie channels showed losses of € 35,6 million on revenue of € 256,3 million. (Of course, this is still better than last year, when losses amounted to a staggering € 419,3 million).
The reason for the losses are the sizable investments made in acquiring the rights for films, series and Ligue 1 football matches (€ 203 million). Over the last 4 years, Les Echos reports that Orange lost nearly € 700 million on its paid content business.
Orange already shut down one of its paying channels Orange Sport, in june of last year, and it’s not the only telecom retreating from the content business.
SFR also offered paid television content bundles and VOD, but it struggled to make them profitable, and is expected to transfer the exploitation of this business to Canal+ (which is, like SFR, a Vivendi subsidiary). And even Free, Xavier Niel’s disruptive telecom operator, stopped offering a proprietaryVOD service. Free is now offering a Canal+ solution.
It looks like Canal+ is the last man standing in VOD and paid content in France.
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