As US telecom giant AT&T awaits approval from regulators to takeover Time Warner for nearly $86bn, many question the conspicuous trend of ISPs buying publishing and content media companies.
When companies like AT&T control access to smartphones, tablets, and TVs with one hand and content with the other, should we be alarmed?
It’s luridly Orwellian and perhaps a reason for pause.A Brave New World
AT&T aim to coalesce their strengths as a distribution network with content from the Warner Brothers film studios. The ambition is that the addition of popular cable TV channels such as HBO and CNN will be enough to secure future profits. This is one of many recent acquisitions by ISPs vying for competitive advantage in a volatile digital marketplace.
Rival Verizon are currently in talks to acquire the foundering Yahoo to grow an already prominent portfolio that includes AOL and the Huffington Post. Predictably, media companies AMC, Netflix, Discovery, and CBS experienced a rise in share prices as speculation and media empire mergers increases.
An AT&T statement advised that users will receive “unmatched choice, quality, value and experiences that will define the future of media and communications.” The statement also proudly declared that they’d “lead the next wave of innovation in converging media and communications industry.”
This proclamation drew attention from pundits, profiteers, and politicians. Presidential nominee Donald Trump quickly spoke out against the acquisition warning that “it’s too much concentration of power in the hands of too few.
” While the Clinton camp advised they are pro-competition.Beyond theory, Verizon and AT&T must confront the realities of changing consumer behavior, app fatigue, online ad legacy, streaming culture, and the overall displacement of long-standing incumbents whose products are incompatible with consumer preferences.
The Consumer Is King
Ultimately, the consumer is king. Long gone are the days of marketing for control. We must now market to appease. And consumers know exactly what they want and are unwilling to settle for less. This puts those recent acquisitions on shaky ground despite how far-reaching they are.
Comparatively, Verizon’s recent pivot is aimed more so at online advertisement. That market is dominated by heavyweights such as Facebook and Google. So it’s difficult to see Verizon making traction in shark-infested waters.
For AT&T, one issue they must confront is app fatigue. Users are selective about the apps they recurrently use, and media apps in particular are household items at this point. YouTube, Netflix, Amazon, Hulu are all presences in the home that won’t be easily evicted. If the plan is to invest billions of dollars to reanimate traditional media, the chances of success are slim.
Furthermore, consumers are done with overbearing communications strategies and products. Consumers lack the time and patience for commercials, programming that isn’t personalized, and content that feels contrived or outdated. And they already took action.
According to research house SNL Kagan, over 1.4 million U.S. customers canceled their TV subscriptions this year. It will take more than 12 episodes of Game of Thrones a year to win them back.
If, however, AT&T and Verizon can tap into current consumer preferences and behaviors with new and improved offerings rather than the same-old dressed up in new clothes, they might have a chance. And if that happens, we should be nervous because the centralization of media is an ominous prospect.
In Sum
Traditional industries wholesale face disruption. The secret to survival is to adapt and evolve to digital by taking risks and promoting in-house experimentation. To avoid disruption, you must be the disrupter.
The recent wave of acquisitions raises important questions about who owns the media we consume. It raises questions about what it would take for AT&T and Verizon to succeed and what their success would signals for us as consumers.
What are your thoughts on these recent acquisitions and potential mergers? Is it a natural progression, a dangerous precedent, or both?
Let me know your thoughts by commenting below.
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