ott revenueSurging uptake of mobile devices and ongoing broadband network expansion is helping drive media and telecom companies’ revenues higher, with digital content distribution expected to lead the way going forward, according to KPMG’s “2013 Media & Telecommunications Industry Outlook Survey.”

More than 70% of media and telecom senior executives surveyed said their company’s revenues have increased year-over-year. Seventy-five percent said they expect revenues will rise again in 2013, with 43% expecting increases of at least 6%, according to a KPMG press release.

Though down 10% so far this year from 2012, more than 80% of respondents believe revenues from digital content distribution will continue to increase for the year as a whole. More than 80% said they have seen a “moderate” increase in revenue from mobile transactions, with 19% saying they have seen a “significant” increase.

Media company senior executives were more optimistic about revenue growth prospects for 2013 than their telecom company counterparts: 83% of media executives surveyed expected revenues to rise this year compared to 68% of telecom company execs.

Maximizing digital revenue growth was viewed as either critical or very important strategically by nearly 70% of those surveyed, with nearly 80% citing “the ability to evaluate information on customers’ purchases, sentiment and preferences.”

New, emerging digital data distribution methods were cited by 50% of media execs as the biggest driver in growing revenues. Twenty-eight percent of telecom senior execs pointed to bundled service offerings, such as IP-enabled Triple and Quad Play, as the biggest driver.

“Digital content and mobile communications are clearly becoming the driving force for growth in the industry,” commented Paul Wissmann, lead partner for KPMG’s Media & Telecommunications practice in the U.S. “But while the media companies are focused on growth from new revenue streams, the telecom companies seem to be focusing their attention on their core offerings and cost containment.”

Price pressure and keeping up with emerging technologies were said to be the most significant barriers to growth: 43% cited pricing pressures as most significant, up from 35% in KPMG’s 2012 survey, while staying on top of emerging technologies was cited by 42%, up from 29% last year.

Thirty-nine percent of media and telecom senior execs see losing market share to lower-cost providers as the biggest threat to their business models. Following this was disruptive technologies, cited by 33%, and political and regulatory uncertainty, at 27%.

Media and telecom companies are increasingly turning to newer technologies such as social media platforms to interact with customers, as well as for internal collaboration, KPMG found. A majority of those surveyed said their companies plan to make greater use digital/social/mobile technologies this year in an effort to establish closer ties with customers.

  • 56 percent say they plan to use the technology for two-way customer engagement and insight;
  •  47 percent for enterprise collaboration and knowledge sharing; and
  • 46 percent for external brand promotion.

Fifty-nine percent of media and telecom company executives surveyed said their companies will boost capital spending in 2013. That compares to 49% who said so last year. The three areas topping the list for increased spending were:

  • New products or services – 47 percent, down from 56 percent last year
  • Geographic expansion (U.S and global) – 40 percent, up from 22 percent last year
  • Information technology – 27 percent, down from 43 percent last year

Commenting further on the results of this year’s survey, “With telcos hampered by intense competition and expensive network upgrades, they appear to be focusing on enhancing the pipe to the consumer, as opposed to making a significant shift into content or services,” Wissmann said. “While they will certainly have a part in the evolution of digital services, as primarily a supplier of bandwidth, telcos run the risk of becoming a business with a product that is increasingly commoditized.”

Other findings in KPMG’s “2013 Media & Telecommunications Industry Outlook Survey” include:

  • Only one-third of the executives say their company is very prepared to manage the impact of public policy and regulatory changes.
  •  42 percent of the executives say their company is at least somewhat likely to be involved in a merger or acquisition over the next year as a potential buyer, with 38 percent seeing their companies as potential sellers. Execs cited cost containment, access to new technology and products, and product synergies as the main drivers of alliances and M&A activity.
  • Moving some items to the cloud seems to be almost a given with the executives, with only 10 percent saying they have no plans to implement cloud technologies. Of the 64 percent of executives who have implemented some aspect of cloud technology, 47 percent said they had only minor or no challenges, while 17 percent said they faced major challenges.

Join the Conversation

Leave a Reply

Your email address will not be published. Required fields are marked *

Don’t Miss Any of Our Content

What’s happening with broadband and why is it important? Find out by subscribing to Telecompetitor’s newsletter today.

You have Successfully Subscribed!