“Average” is always potentially misleading when discussing any trend related to the internet. To a lesser extent, perhaps, “average” also can be misleading in the connectivity or data center businesses. Everyone can see that traditional linear subscription television is in decline, while streaming services are growing.
But there are big differences in rates of change and direction of change in different markets. The slide is biggest in the U.S. market, but other markets are growing.
Also, asset ownership matters. Though most streaming services are owned by third parties, connectivity providers might own those assets in some cases. That makes possible significant revenue growth for connectivity providers who also are asset owners.
But high rates of content investment and pressure on average revenue per account present many of the same financial challenges as faced by connectivity service providers investing in their core businesses: high capital investment and slow growth with often declining ARPU.
Content no longer seems to be a silver bullet for revenue growth, as once might have been believed three decades ago. And content profit margins have often not matched those of legacy connectivity services, either. Though some content services offered by connectivity providers once had profit margins as high as 40 percent, margins have since dipped towards 10 percent for many, though perhaps remaining as high as 20 percent for the providers with the most scale.
No comments:
Post a Comment