Getting ready for an upcoming presentation, I've been thinking about the relative value of entertainment services, as compared to voice and data applications.
As important as video is for a telecom provider's business case, as well as its foundational role for satellite and cable companies, my thinking has been that voice and data apps of various sorts have been, and likely will be, more important for firms with roots in the telecom business.
Part of the argument rests on profit margin. Cable and satellite providers can assume they will have high margins. Attackers tend to find more-modest margins, in part because of scale economies that favor providers with high penetration.
Telecom providers tend to see higher margins on voice and data services.
Revenue opportunity also plays a part. The voice and data business simply is far larger than the video entertainment business. Depending on how one categorizes the business, the voice and data service business is twice to three times bigger than video services business.
With the advent of Web and IP-based communications, including email, text messaging, instant messaging and "non-traditional" communication modes such as micro-blogging, blogging, I'd argue the centrality of "communications" has grown, even for activities that might arguably be considered "media" or "content."
Consider that social networking among U.S. broadband users has grown 93 percent since 2006, and has increased the amount of time people spend communicating online 18 percent, to 32 percent of total online time, according to Netpop Research.
As online communications has increased, the time spent on traditional forms of online entertainment has declined 29 percent, and is now down to 19 percent of total online time.
Video is important; just not as important as voice and data. Communications remains more important than entertainment, at least for firms with a telecom rather than entertainment orientation.
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