Telcos Quietly Infiltrate TV Industry in Pursuit of Advertising

by Matt Klassen on November 18, 2015

Without a great deal of fanfare traditional telcos have crept into the television market, now providing approximately one fifth of the world’s pay-TV subscriptions. According to global market analysis firm Ovum, “Operations owned or controlled by telcos accounted for 140 million retail pay-TV customer connections globally at the end of 2014 and this total soared to 177 million during 2015 – equivalent to 19% of the total pay-TV subscriber base (up from 14% year-on-year).”

In fact, it seems that while we’ve all been discussing the future of telecommunications with uncertainty and trepidation, the operators themselves have taken the matter well in hand, with the likes of AT&T and Verizon making strong gains in the TV market over the last year.

While Ovum predicts the growing dominance of telcos in the TV industry will likely plateau at around the 20 percent mark, it stands as evidence of the evolving wireless market, one that now extends well beyond smartphones and tablets, ever-encroaching into non-traditional telco territory, always in pursuit of ways to get more eyes on advertising.

Of course it should come as no surprise to hear that the goal for telcos, as it is for everyone else in today’s digital revolution, is the expansion of its advertising base, finding more platforms, more channels, and simply more ways to get eyeballs on ads, hoping to find ways to capitalize on this dominant, albeit diminishing, revenue stream.

To that end, much has been made of late about AT&T’s acquisition of DirecTV; one that Ma Bell hopes will only bolster its advertising efforts. In fact, the company has partnered advertising firm Opera Mediaworks to devise a way to develop a multi-screen approach to advertising, one that would deliver unified advertising content over a multitude of devices.

According to Mike Welch, head of the initiative at AT&T, “we’re now able to tie a specific target household on TV with the mobile devices associated with that same target household.” This means, of course, that AT&T is close to leveraging the massive amounts of data it has on its customers to deliver the same sorts of targeted advertising over your phone or TV, so you’ll see the same pop-ups for those shoes you already bought over and over again, regardless of what screen you’re looking at.

But the problem for telcos in the television realm is that they’re late to the party, and the brand of advertising they hope to deploy in this multi-screen approach is quickly dying, as users become increasingly frustrated with the interference these ads cause, not to mention the fact that poor targeting means that these ads are, generally speaking, completely irrelevant.

Not only that, but if telcos (and every other digital player with revenues connected to advertising) thought it was hard to target individuals, just wait to see how difficult it will be to reliably target households, which will likely contain multiple individuals with a multitude of different interests. How annoying will it be to have your video stream constantly interrupted by advertising aimed at your teenage daughter? Enough that you’ll likely consider ad-blockers for your TV I would guess.

In the end, it’s abundantly clear that the wireless market is evolving, with telcos expanding their operations into erstwhile unexplored markets, but if the goal is to simply find different ways to deliver advertising as opposed to delivering a unique set of solutions, products and services such expansion will be doomed to failure, and telcos will be back to square one, again attempting to find ways to stay relevant.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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