The number of commercial 5G devices almost tripled in Q2 – GSA

The latest data from the Global mobile Suppliers Association show the number of 5G devices being launched worldwide is accelerating rapidly.

If you take at look at the GSA data from the end of March only 19 vendors had announced forthcoming 5G devices, with 33 models officially confirmed. These numbers have now significantly increased, with the latest data showing 39 vendors have now announced upcoming devices and the number of officially confirmed devices has now nearly tripled, standing around 90.

Looking in depth at the recent data also provided by GSA, 28% of the 90 officially confirmed devices are phones (the number standing at 25). On top of that GSA found 23 CPR devices, 23 modules, seven hotspots with assorted dongles, routers and drones comprising the chasing pack. The devices contained 5G chipsets from just four vendors – Qualcomm, Mediatek, Samsung and Huawei, with Intel no longer in the game.

As expected, smartphone vendors have jumped on 5G for various marketing campaigns. The most conspicuous of these is Samsung, which released  the Galaxy S10 5G first in Korea on earlier this year and then in the UK on June the 7th . The S10, due to its 5G compatibility, has a wider array of VR and AR functions than other 4G phones. This new way to experience VR and AR is critical as it will reach further out towards the younger generations who enjoy mobile gaming or more specifically games like Pokémon GO and the more recent Harry Potter: Wizards Unite that heavily rely on the use of AR.

This latest batch of data from the GSA indicates the device ecosystem is fully ramping up its 5G output. How much of this is purely speculative rather than responding to specific demand is still unclear, but we should get the first lots of 5G device sales data before long, which will clarify things.

Niantic’s Harry Potter launches but remains in Pokémon Go’s shadow

Harry Potter: Wizards Unite is up-and-running, but its dash from the starting line is no-where near as fast as Niantic’s gold standard, Pokémon Go.

Few would have predicted the roaring success of Pokémon Go. Most would have assumed it would have done well, but the sustained acceleration of downloads and revenues came as a surprise to most. Even now, almost three years after the launch of the game, Niantic is still hoovering up the cash; the first quarter of 2019 brought in an estimated $205 million; it left a lot for Harry Potter to live up to.

But if you are expecting new records to be broken, you might feel a little bit underwhelmed.

This is not to say Harry Potter: Wizards Unite is not doing well. Most app developers would sell their left leg for the numbers being reported over this weekend. According to estimates from Sensor Tower, Harry Potter: Wizards Unite was downloaded three million times over the opening weekend, bringing in $1.1 million in player spending. Projections for the first month stand at roughly $10 million.

For a single title, most developers would be thrilled by this, but Niantic will always have the Pokémon Go comparisons to deal with.

During the first four days of Pokémon Go, Niantic boasted 24 million downloads and player spending of $28 million. In the first month, player spending reached $206 million and downloads were almost 173 million. Realistically, Harry was always going to struggle to meet these expectations. But that is not to say it won’t be a success.

Your correspondent downloaded the game over the weekend and has been playing around with it over the last few days, and it is pretty good. The experience is better than Pokemon Go, the AR is closer to what many would expect and there is more of a story involved.

There are a few issues, though many of these would have been expected. Heavy data consumption should be expected, your correspondent used 636 MB in the first two days and wasn’t using it as much as most would. Battery life also takes a notable kick, five hours was knocked off what was to be expected on the device in question. Both of these factors might have a notable impact on how much users are using the game in the long-run.

But why has Harry Potter: Wizards Unite fallen short on the lofty goals? We suspect the nostalgia factor is the biggest contributor.

Firstly, lets have a look at the audience. Pokémon came into existence in 1996 primarily targeted at children, however even in the early days there was popularity with those in their 20s. Those who played the original games are 23 years older, though the TV series also proved to be incredibly popular across the world, running from 1997 through to today. There will be millions who are in their 20s, 30s and 40s who would have watched the show and felt the nostalgia bug when the game was launched almost three years ago.

The first Harry Potter title was released in 1997, though perhaps did not reach the peak of its fandom for a decade. During the 00s, the final books were being released and the films were taking the franchise to new audiences. Harry Potter remains popular today, but the core audiences are younger due to the longer period of time it took the spark to grow into a flame.

In short, the nostalgia bug bit for more people in control of credit cards for Pokémon Go than with Harry Potter: Wizards Unite. Many of those downloading the Harry Potter title today will have to ask permission from parents to make purchases, whereas we suspect a much higher proportion of those with Pokémon Go can make their own financial decisions.

Looking at statistics revealed by Survey Monkey a few months after Pokémon Go was released, 71% of players were aged between 18 and 50. The comparative numbers have not been revealed for Harry Potter: Wizards Unite just yet, but we suspect they will be a lot younger. For the final two films of the Harry Potter series, 56% and 55% were over the age of 25, but the books are designed for teenagers.

Secondly, we are going to have a look at the global appeal of both titles.

Although both are incredibly popular throughout the world, one originated in the UK and the other in Japan. Due to the fact the Pokémon TV series was animated, dubbing into new languages would have been much simpler, increasing the accessibility of the content. The TV series is available in 169 countries around the world, while the Harry Potter book series has been translated into 80 different languages.

Harry Potter is very popular in the likes of Japan, South Korea and China, though we suspect it does not exceed the popularity of Pokemon at its prime. This will have a translation into the nostalgia effect which drove the initial adoption of Pokémon Go and the continued success today. Let’s not forget, the US and Asia are the two biggest regions for gaming revenues and perhaps these markets favour the Pokemon brand over Harry Potter.

We confident the Harry Potter game will be a success, but it isn’t able to tap into the nostalgia effect of the right audiences. With the brand continuing to be more relevant than Pokemon is today, see the theme parks and sustained popularity of the movies, it will bring in revenues but perhaps not on the same scale in the short- to mid-term as Pokémon Go.

What we are less confident about is the impact this will have on the normalisation of AR in the entertainment world as a direct result. Yes, it will have an incremental impact and open the eyes of some, but we doubt this will be a watershed moment for the technology.

That said, we do not believe there will ever be a watershed moment for AR. This is likely to be a technology which gathers momentum slowly, gradually being introduced as additional features in every day life. Before we know it, AR will be everywhere, and we’ll wonder where it came from.

Niantic’s Harry Potter might take AR into the world of reality

Augmented Reality is a technology which has promised a lot but hasn’t delivered to date. Niantic will be hoping the hype converts into gain with the launch of Harry Potter: Wizards Unite.

Aside from being a title which taps into the nostalgic cravings of millennials, this is one of the first products which promises to genuinely make use of AR. Of course, we will reserve judgments until the product has been launched on Friday (June 21), but there will always be doubts in the build-up.

The doubts tie back to Pokemon Go. This was an incredibly successful app for Niantic and still brings in the profits. But, from an AR perspective, it wasn’t that genuine. This was an app which laid static images onto reality through the camera. For some, this might be AR, but realistically, AR has to interact with the environment. It was a half-way solution, but commercially it was incredibly successful.

There are perhaps two major reasons it was a massive money-maker for the firm. Firstly, it was a game which offered a new twist to users. Little could be compared to Pokemon Go at the time, and it captured the interest of millions. Secondly, nostalgia.

Nostalgia is a powerful draw for many, and in Pokemon Go, Niantic engaged numerous generations. The same could be said about Harry Potter. Spreading through the books and the movie franchise, this is a title which could attract interest from today’s generation through to those in the 40s. If the game is any good, it could make a ridiculous amount of cash.

The promise is this game will actually deliver on the AR expectations. Users will be able to explore the Muggle world through the app, encountering various characters, challenges and missions in different physical locations. Users will be asked to assume the character of a new recruit in the Statute of Secrecy Task Force to investigate The Calamity.

We’re not too sure what to expect, but we are pretty sure the downloads with soar over the first couple of days. The depth of the experience and the effectiveness of the new technology will drive popularity once the initial excitement has dipped.

One of the areas which is worth keeping an eye on is whether they can prevent the servers from crashing.

This was one of the issues which Pokemon Go faced. It would appear Niantic did not anticipate the popularity of the app, resulting in the service crashing constantly for weeks on end. We dread to think how much revenue was lost due to the fact users couldn’t actually log on, and we hope lessons have been learned. Surely the right amount of resource has been allocated but the same issue persists; predicting demand is a very difficult task.

The next couple of weeks could prove to be very interesting. Firstly, whether Niantic is finally embracing AR properly, and secondly, whether this opens the door for everyone else. If this app proves to be successful, consumers might have their eyes opened to the promise of AR. This app might be a very important factor in validating the technology for the general public.

The doors could be blown off the hinges, or at least if you are watching the doors on the screen of your smartphone.

Google has another run at the AR world

Google is taking another crack at the growing augmented reality segment with the launch of Glass Enterprise Edition 2.

While the first enterprise product has seemingly trundled along without fanfare, Google will be hoping the segment is ripe enough to make the desired millions. Although this is a technology area which promises huge prospects in the future, sceptics will suggest society, networks and the supporting ecosystem isn’t quite ready to make this dream a reality.

“Over the past two years at X, Alphabet’s moonshot factory, we’ve collaborated with our partners to provide solutions that improve workplace productivity for a growing number of customers – including AGCO, Deutsche Post DHL Group, Sutter Health, and H.B. Fuller,” said Jay Kothari Project, Lead for Glass. “We’ve been inspired by the ways businesses like these have been using Glass Enterprise Edition.

“X, which is designed to be a protected space for long-term thinking and experimentation, has been a great environment in which to learn and refine the Glass product. Now, in order to meet the demands of the growing market for wearables in the workplace and to better scale our enterprise efforts, the Glass team has moved from X to Google.”

This is a massive step for any Google idea. Graduating from the moonshot labs to be listed as a genuine brand in the Google family is a sign executives think there are profits to be made now, not in the future. Over the last couple of months, we’ve seen the likes of Loon and Fi make their way into the real world, and now it is time for Glass to hit the big time.

Google Glass was first brought to the market in 2013, though this wasn’t exactly a riveting success. Perhaps it was just a sign of the ecosystem and society at the time; people just weren’t ready for this type of innovation. However, Google is a company which often demonstrates innovation leadership and it was never going to completely give up on this idea. The products were taken back to the labs and refined.

What you have now is an enterprise orientated product which has the potential to run into the mass market. This makes sense for two reasons; firstly, there are more immediate usecases for the enterprise world, and secondly, businesses have more money to spend on these types of products than the consumer.

What remains to be seen is whether Google has any long-term interest in the hardware space or whether this is a game-plan to generate momentum in an embryonic segment.

When you look at the smart speaker segment, Google was always set to make more money in software and services than the hardware space. As soon as the traditional audio brands got the idea, its products were going to come up short. However, selling the hardware cheap to gain consumer buy-in while simultaneously demonstrating market appetite to the traditional brands was an excellent move.

Now there are more mainstream brands starting to develop their own smart speakers, Google can create partnerships to ensure its virtual assistance is exposed to the consumer and make money through means which are embedded in its corporate DNA; third-party relationships and online advertising.

Google might well have ambitions to take a leadership position in the AR glasses space, but you can also guarantee it has bigger plans to make profits through the supporting software and services ecosystem.

SK Telecom is bolstering 5G launch with rich content

South Korea’s largest mobile operator will switch on 5G service for consumers on Friday and has plenty of goodies for consumers to fill the bandwidth with.

After publishing its 5G service packages for consumers, SK Telecom (SKT) announced that it is beefing up content, from streamed games to HD and VR videos, that the 5G users can choose from. In a press release the company claimed it has secured around 8,000 different content titles.

A special section for 5G called “SKT 5GX” is set up in SKT’s OTT video service that would include VR video (concert, city and museum tours), 5G MAX (IMAX-like experience), and UHD content (dramas, entertainment shows and music videos in 4K and above). There on offer will also be VR and AR games as well as exclusive streaming games. Additionally, a social VR will enable “multiple users to watch baseball games together in a virtual reality environment.”

“The AR, VR and cloud games unveiled today only mark the beginning of the age of Hyper-Innovation brought by 5G,” said Park Jung-ho, the Chief Executive Officer of SK Telecom. “SK Telecom will continue to introduce 5G-based innovative services to lead all areas of New ICT.”

In order to promote the early adoption of 5G, SKT will zero-rate data for consuming the content from ‘SKT 5GX’ section of the OTT mobile video service, as well as provide up to 5GB of free data for users of its mobile games and VR games. The promotion will run till the end of June.

SKT said that it has rolled out 34,000 5G base stations covering 85 metropolises across the country as well as some hotspots like shopping centres, metro lines in the greater Seoul region, etc., and is planning to expand the coverage to all the metro lines in the country, as well as the national parks and festival sites. The company has excluded Huawei from its 5G business and has been working with Ericsson, Nokia, and Samsung.

RAN and AR app revenues forecast to increase rapidly

In its preview of MWC 2019, analyst firm Ovum has forecast that revenues for both radio kit and augmented reality mobile apps will increase significantly in the next few years.

Ovum anticipated what it thinks will be the major themes of this year’s show and, unsurprisingly, 5G dominates. Monetization, device hype, mobile video and enterprise are all aspects of 5G that Ovum reckons will be extensively debated at the Barcelona telecoms fest. While there are still plenty of unanswered questions at this early stage on 5G, Ovum seems quite bullish about its commercial prospects.

While the RAN kit market is forecast to slightly decline this year, it’s expected to bounce back and start growing rapidly by 2021.

Ovum RAN forecast

On the back of all this lovely extra bandwidth augmented reality apps are also forecast to become a lot more popular. While revenues from that segment fell in 2017, they’re expected to increase by around $2 billion per year for the next few.

Ovum AR app forecast

Other major themes anticipated in the report include: consumer AI, data privacy, IoT and RCS.

Three questions to ask at MWC this week

The sandwiches are stale, the beer is over-priced and the queue for a taxi is a depressing sight, it can only mean one thing; we’re heading back out to Barcelona for Mobile World Congress.

Some people might suggest the importance of this annual event is dwindling, but it is arguably still the focal point of the telecommunications industry. Buzzwords will be everywhere this year, but there are three important questions we are hoping to find the answer to over the next four days.

How will the telcos sell 5G to the consumer?

After years of being promised 5G will change our lives, now is the time for the hype to transfer into reality. Over the next twelve months dozens of operators around the world will launch 5G networks and we’ll start to experience the connected vision of tomorrow. But for all the propaganda, now we need the delivery.

While many have been gearing up for enterprise related services and business models, telcos will have to figure out how to sell 5G to the consumer. It might not be the biggest pot of gold available, but it is certainly revenue which can be squeezed out of customers. But how do you convince consumers to spend those extra pounds each month?

Marketing and sales strategies in the telco industry have always been built around the idea of ‘bigger, badder, faster’, with consumers constantly being told extra speed is the best possible solution for worldly woes. To be successful in the future, new ideas will be needed. As it stands, 4G is very fast and can get faster. These are networks which can handle pretty much every service or product which is available to the consumer, and it’ll be years before we hit the speed ceiling again. So how do you sell 5G to a consumer when speed is no-longer a pain point.

Currently, 5G is a solution without a consumer problem. Soon enough the services will appear to demand the bigger speeds, but whoever figures out how to balance this tricky equation in the meantime will certainly be in a good place.

What impact is politics having on the telco industry?

Its impossible to escape politics at the moment, and the on-going conflict between the US and China is central to this tale.

There is certainly an impact, though how much trauma this will create in the long-run remains to be seen. Right now, you can already see certain markets thriving and others dithering through a landscape of accusation, aggression and uncertainty.

Over in Korea, the telcos are rapidly rolling out 5G. This is one country which snubbed Huawei, though this should have come as little surprise considering a preference for a domestic champion. The Korean telcos are embracing 5G and the stable environment which has been created, leaping ahead to claim a leadership position in the race towards connected riches.

In Europe, progress might be faltering. Although many of the European nations do not seem to share the aggressive anti-China sentiment as the US, rule makers are yet to carve out a specific position on Huawei as a vendor in the 5G mix. Right now, it does look like Huawei will largely be able to operate throughout Europe, but the various governments and the European Commission are yet to define a concrete position.

All this creates is an element of uncertainty and uncertainty is the enemy of investment. It’ll be interesting to see what impact this political predicament is having on the industry, and how much of a slowing impact it is having on deployment plans throughout the bloc.

What does the future hold for the humble smartphone?

Foldable phones have been stealing the headlines over the last couple of weeks, and it does beg the question of what the smartphone will look like in a decade.

Although numerous companies have tried and failed to redefine what we conceive as a communications device, there are certainly some interesting developments which will not only encourage the evolution from a form-factor perspective, but also the way in which we use and perceive devices.

The foldable devices are an interesting development, entertainment and gaming will be taken up a notch, but you also have to consider gesture control, voice interaction, biometric authentication and edge computing.

Looking at the gesture control and voice interaction to start, with connectivity being built into everything around us not just the smartphone, the idea of a digital gateway is completely redefined. Factor in Bluetooth headsets and augmented reality glasses, suddenly you don’t need to look at a screen all the time to ride the virtual highway. The constant demand for a screen might erode when your voice can deliver everything you need.

For biometric authentication, once most of your data is stored on the cloud, theoretically every screen could become your interface. And of course, once edge computing starts leaping forward, more processing power can be removed from the phone and hosted elsewhere. Not only will this allow for more powerful services and applications, but it changes the requirements for components in and on devices.

Combine all of these factors, and the idea of a smartphone changes. There could be a lot more freedom to create new products.

Grab me and talk to me!

We’ll be wandering through the halls over the next couple of days at MWC, so if you want to expense a beer and set the world to rights, grab me and talk to me!

Almost one zettabyte of mobile data traffic in 2022 – Cisco

Cisco forecasts that 5G connections will go from nothing in 2017 to 3.4% of the global total in 2022. Over the same period annual mobile data traffic will reach 930 exabytes, a seven-fold growth.

The report provides plenty of valuable data points for the industry, both of records of recent history and predictions of the near future. For example, despite the expected fast growth of 5G, by 2022, 4G will continue to dominate both the number of connections and the data generated. 54% of total connections will be on 4G, which will generate 71% of total mobile data traffic. Mobile data traffic will represent 20% of all IP traffic by 2022.

With regard to data traffic by individual devices, on average a smartphone will generate 11 GB of traffic per month by 2022, up from 2GB in 2017. Mobile video will be responsible for even higher proportion of the total traffic. 59% of the total mobile data was video in 2017. This number will grow up to 79% by 2022, and the absolute data volume of mobile video will increase by nine times.Cisco VNI monthly data volume

The report identifies seven key global mobile networking trends, from Cisco’s perspective.

  1. Evolving toward Smarter Mobile Devices: this largely refers to the high and increasing percentage of smartphones, including phablets, in all the connected devices (from 50% to 54%), as well as the fast growth of M2M connections (from 11% to 31%). Main segment losing out will be non-smartphones (from 34% to 10%).
  2. Defining Cell Network Advances: this trend refers to the accelerated growth of mobile connections on newer technologies (4G and 5G) in contrast to the fast decline of the number of 2G connections and the gradual decline of 3G connections. Another fast-growing segment is M2M on Low-Power Wide-Area (LPWA) networks, increasing from 130 million in 2017 to 1.8 billion by 2022. Cisco VNI connections by technology
  3. Measuring Mobile IoT Adoption: captured in this trend is the continued growth of M2M and wearable connections. Globally, M2M connections will grow from just under 1 billion in 2017 to 3.9 billion by 2022, a CAGR of 32%. Wearables are treated as a subset of M2M connections by Cisco. The report forecasts 1.1 billion wearable devices globally by 2022, more than double the volume of 526 million in 2017, with a CAGR of 16%. Among them, 10% will have embedded cellular connectivity, up from 4% in 2017.
  4. Expanding Role and Coverage of Wi-Fi: the volume of mobile data may be big, but the volume of mobile data going through Wi-Fi offload is even bigger. The report forecasts that 59% of all data from mobile connected devices will be offloaded to Wi-Fi in 2022, amounting to 111.4 exabytes per month, up from 54% offload, or 13.4 exabytes per month in 2017. To enable the fast growth of offload data volume, the report forecasts, there will also need to have much more Wi-Fi hotspots. It estimates that Wi-Fi hotspots (including homespots) will grow from 124 million in 2017 to 549 million by 2022.
  5. Identifying New Mobile Applications and Requirements: in addition to video being the application category that generates the lion’s share of total mobile data traffic, VR, AR and Mixed Reality are also expected to experience a fast growth in the coming years. Globally, augmented and virtual reality traffic will grow from 22 petabytes per month in 2017 to 254 petabytes per month in 2022.
  6. Comparing Mobile Network Speed Improvements: the speed of mobile data is determined by both the networks and devices. In particular with the accelerated 5G rollout in the forecast period, the report expects to see the average speed of mobile network connection to increase from 8.7 Mbps in 2017 to 41.6 Mbps in 2022. The speeds also vary vastly between technologies. While the average 4G speed is expected to grow from 30 Mbps in 2017 to 44 Mbps in 2022, the average 5G speed will increase from 76 Mbps in 2019 to 170 Mbps in 2022. Cisco VNI speed by technology
  7. Reviewing Tiered Pricing, Unlimited Data and Shared Plans: the final trend examines what impact operators’ data packages and tiered pricing schemes will have on customers’ data consumption patterns. One interesting finding is that, a combined effect of all users increasing their data usage and more operators reintroducing data package cap has driven the proportion of data generated by the top 1% of users down from 52% in 2010 to only 6% in 2018.

The Visual Networking Index is produced by combining Cisco’s proprietary data and assumptions with that published by professional research firms as well as by the ITU.

Three UK’s guerrilla marketing strategy backfires

Challenger brands need to try harder to get noticed, but this approach can sometimes backfire, as Three UK found out this week.

Three is hoping to build on its #PhonesAreGood campaign, launched in October last year, that took a tongue-in-cheek look at all the negative press around smartphone addiction by imagining some historical scenarios that would have been changed for the better with the involvement of a smartphone.

One of those scenarios concerned King Henry the Eighth, who notoriously got through six wives by the time he called it a day. The joke is that if he’d had some kind of dating app at the time he might have been able to make up his mind about them prior to marriage and thus a couple of them could have been spared the chop.

In the build up to Valentine’s Day some bright spark in Three UK’s marketing department thought it might be a laugh to promote this part of the campaign with a tweet entitled ‘Shag, marry or behead’. This was presumably a nod to the ‘kiss, marry, kill’ game and maybe even the phrase used by history students to remember what happened to Henry’s wives: ‘Divorced, beheaded, died; Divorced beheaded survived’.

Now you don’t have to be the most committed social justice warrior to know that Twitter is not the place for nuance or humour and anything that can be taken offence to will be. While the tweet was clearly a joke, there was always the possibility that it could be perceived as some kind of trivialising or even endorsement of domestic violence by someone.

That someone was apparently mumsnet member Jeanhatchet, who flagged up the tweet on the site’s forum. “The 3 mobile network are laughing at domestic homicide in this tweet, Jeanhatchet wrote. “In many of the women killed as a result of intimate partner violence blunt force trauma to or being stabbed in the head is a feature.

“The most worrying thing is …. how did this marketing meeting go? What views were expressed about killing women? How that was funny and would sell more contracts and phones? Imagine those men who sanctioned this and how common their views are that it never registered as a marketing disaster? https://twitter.com/threeuk/status/1095740892919541761?s=21” Three seems to have taken down the offending tweet by here’s a screenshot of it courtesy of Jeanhatchet. Google is also still acknowledging the original tweet.

3 UK deleted tweet

 

3 UK deleted tweet Google

That was enough for the Manchester Evening News to get involved, which committed not one but two dogged hacks to the job of writing up this mumsnet post and the rest of the claimed ‘flurry of complaints’ around Three’s tweet. Even their combined efforts weren’t enough to ensure the faithful representation of the discussion thread they were copying-and-pasting, however, with one of Jeanhatchet’s early comments wrongly attributed to  Lolkittens5, to whom she was responding.

Hot on their heels was Labour MP James Frith, who apparently spent most of yesterday working himself up in to an impressive froth of righteous indignation. “This is a disgraceful ad,” he opened. “Misogynistic and violent towards women. The disgrace of it. I hope you’re fined big time for this with proceeds sent to women’s refuges. Utterly shameful @ThreeUK”

Three, of course, tried the standard ‘we are sorry for any offence caused’ defence but, as is nearly always the case, it was too little too late. Apparently emboldened by the 30 likes and four retweets his initial Twitter salvo received Frith doubled down, including the textbook move of calling for an apology and then rejecting it when it was made. He concluded by vowing to grass Three up to the ASA before wrapping up his busy day by retweeting a story about how great his constituency is.

Unperturbed Three announced a new marketing initiative today around London Fashion Week. It’s claiming to have launched the world’s first 5G mixed reality catwalk, It ‘uses innovative start up Rewind and its Magic Leap mixed reality technology alongside Three’s 5G network, which will see the designer’s inspirations come to life on the catwalk,’ according to the press release.

Somehow this involves the son of singer Liam Gallagher and actress Patsy Kensit, who is apparently a world-renowned model and, as you can see below, has inherited his father’s petulant resting face. Perhaps this is intended to distract from Three’s rather weak 5G claims, with vague talk of IoT and AR the only substantiation offered.

3 UK Lennon Gallagher

“Today we are turning up the volume on 5G and bringing it to life for the first time in the UK, right here in the heart of the fashion world,” said Shadi Halliwell, chief marketing officer at Three. “By giving students access to the next generation of mobile technology, they will be able to push the boundaries of learning, innovation and sustainability to create in a way that’s never been possible.”

Halliwell, who presumably signed-off on the problematic tweet, will be hoping this new initiative will be free from controversy, or maybe not. It’s possible that the tweet was made in the hope of a bit of viral exposure, but that seems unlikely when you consider how quickly it was deleted. One thing, at least, Three will have gained from the experience is the knowledge that guerrilla marketing is a very high-risk strategy these days.

Who’s got the stones to buy Netflix?

Apple, Disney, Microsoft or Apple; one of the biggest questions which has circled the technology industry over the last couple of years is who could possibly acquire Netflix?

The streaming giant, Wall Street’s darling, has almost constantly been talked up as an acquisition target. However, another year has passed and it’s another year where no-one managed to capture the content beast. You have to start to wonder whether it will ever happen, but here we’re going to have a look at who might be in the running.

Netflix numbersWith subscriptions totalling more than 148 million, 2018 revenues exceeding $15.7 billion and operating income up to $1.6 billion, Netflix would certainly be a useful addition to any company. However, with market capitalisation now roughly $143 billion and debt which would make your eyes water, an acquisition would be a scary prospect for almost everyone.

First and foremost, let’s have a look at some of the players who might have been in the equation, but alas, no more.

Disney has been a rumoured acquirer for almost as long as Netflix existed. This is an incredibly successful company, but no-one is immune to the shift tides of the global economy and consumer behaviour. Getting in on the internet craze is something which should be considered critical to Disney, and Netflix would have given them a direct-to-consumer channel. However, there was always a feeling Disney would develop its own proposition organically and this turned out to be the case.

AT&T is another company which might have been in the fray, but its Time Warner acquisition satisfied the content needs of the business. All telcos are searching to get in on the content cash, developing converged offerings, and AT&T is a company which certainly has a big bank account. As mentioned above, the acquisition of Time Warner completes rules this business out.

There are of course others who might have been interested in acquiring the streaming giant, but for various reasons they would not be considered today. Either it would be way too expensive, wouldn’t fit into the company’s objectives or there is already a streaming service present. But now onto the interesting stuff, who could be in the running.

Microsoft logo

Microsoft

From doom to gloom, CEO Satya Nadella has certainly turned fortunes around at Microsoft. Only a few years ago, Microsoft was a shadow of its former self as the declining PC industry hit home hard. A disastrous venture into the world of smartphones was a slight detour but under the cloud-orientated leadership of Nadella, Microsoft is back as a lean, mean tech heavyweight.

Alongside the cloud computing business, Microsoft has also successfully lead the Xbox brand into the digital era. Not only is the platform increasingly evolving into an online gaming landscape, but it also lends itself well to sit alongside the Netflix business. If Microsoft wants to compete with Amazon across the entire digital ecosystem, both consumer and enterprise, it will need to expand the business into more consumer channels.

For Netflix, this might be an interesting tie up as well. Netflix is a business which operates through a single revenue stream at the moment, entertainment, and might be keen to look at new avenues. Gaming and eSports are two segments which align well with Netflix, opening up some interesting synergies with Microsoft’s consumer business.

“Microsoft is at a crossroads,” said independent telco, media and tech analyst Paolo Pescatore. “Its rivals have made big moves in video and it needs to follow suit. The acquisition addresses this and complements its efforts with Xbox. The move also strengthens its growing aspirations in the cloud with Azure, firmly positioning itself against Amazon with AWS and Prime video.”

However, while this is a company which could potentially afford to buy Netflix, you have to wonder whether it actually will. The Netflix culture does not necessarily align with Microsoft, and while diversification into new channels is always attractive, it might be considered too much of a distraction from the cloud computing mission. Nadella has already stated he is targeting the edge computing and AI segments, and considering the bounties on offer there, why bother entertaining an expensive distraction.

Apple Store on 5th Avenue, New York City

Apple

Apple is another company which has billions floating in free cash and assets which could be used to leverage any transaction. It is also a company which has struggled to make any effective mark on the content world, excluding iTunes success. With Netflix, Apple could purchase a very successful brand, broadening the horizons of the business.

The last couple of months have shown Apple is not immune to the dampened smartphone trends. Sales are not roaring the same way they were during yesteryear, perhaps because there has been so little innovation in the segment for years. The last genuine disruption for devices probably came from Apple a decade ago when it ditched the keyboard. Arguably everything else has just been incremental change, while prices are sky-rocketing; the consumer feels abused.

To compensate for the slowdown, CEO Tim Cook has been talking up the software and services business unit. While this has been successful, it seems not enough for investors. Netflix would offer a perfect opportunity for Apple to diversify and tap into the recurring revenues pot which everyone wants to grab.

However, Netflix is a service for anyone and everyone. Apple has traditionally tied services into Apple devices. At CES, we saw the firm expand into openness with new partnerships, but this might be a step too far. Another condemning argument is Apple generally likes to build business organically, or at least acquire to bolster existing products. This would stomp all over this concept.

Alibaba Logo

Alibaba

A Chinese company which has been tearing up trees in the domestic market but struggled to impose itself on the international space, Alibaba has been hoping to replicate the Huawei playbook to dominate the world, but no-where near as successfully.

Perhaps an internationally renowned business is exactly what Alibaba needs to establish itself on the international space. But what is worth noting is this relationship could head the other direction as well; Netflix wouldn’t mind capitalising on the Chinese market.

As with any international business a local business partner is needed to trade in China. Alibaba, with its broad reach across the vast country, could prove to be a very interesting playmate. With Netflix’s Eastern ambitions and Alibaba’s Western dreams, there certainly is dovetail potential.

However, it is very difficult to believe the current US political administration would entertain this idea. Aside from aggression and antagonistic actions, the White House has form in blocking acquisitions which would benefit China, see Broadcom’s attempted acquisition of Qualcomm. This is a completely different argument and segment but considering the escalating trade war between the US and China, it is hard to see any tie up between these two internet giants.

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Google

If you’re going to talk about a monstrous acquisition in Silicon Valley, it’s difficult not to mention Google. This is one of the most influential and successful businesses on the planet with cash to burn. And there might just be interest in acquiring Netflix.

Time and time again, Google has shown it is not scared of spending money, a prime example of this is the acquisition of YouTube for $1.65 billion. This might seem like pocket change today, but back in 2006 this was big cash. It seemed like a ridiculous bet for years, but who is laughing now?

The issue with YouTube is the business model. Its advertiser led, open to all and recently there have been some PR blunders with the advert/content alignment. Some content companies have actively avoided the platform, while attempts to create a subscription business have been unsuccessful. This is where Netflix could fit in.

“Google has made numerous failed attempts to crack the paid online video landscape,” said Pescatore. “Content and media owners no longer want to devalue their prized assets by giving it away on YouTube. Acquiring Netflix gives Google a sizeable subscriber base and greater credibility with content and media owners.”

Where there is an opportunity to make money, Google is not scared about big cash outlays. Yes, Netflix is a massive purchase, and there is a lot of debt to consider, but Google is an adventurous and bold enough company to make this work.

However, you have to question whether the US competition authorities would allow two of the largest content platforms to be owned by the same company. There might not necessarily be any direct overlap, but this is a lot of influence to have in one place. Authorities don’t generally like this idea.

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Verizon

Could Verizon borrow a page from the AT&T playbook and go big on a content acquisition? Perhaps it will struggle to justify the expense to investors, but this one might make sense.

Verizon has been attempting to force its way into the diversification game and so far, it has been a disaster. While AT&T bought Game of Thrones, Verizon went after Yahoo to challenge the likes of Google and Facebook for advertising dollars. A couple of data breaches later, the content and media vision looks like a shambles. Hindsight is always 20/20 but this was a terrible decision.

However, with a 5G rollout to consider, fixed broadband ambitions and burnt fingers from the last content acquisition, you have to wonder whether the team has the stomach to take on such a massive task. Verizon as a business is nothing like Netflix and despite the attractive recurring revenues and value-add opportunities, the integration would be a nightmare. The headache might not be worth the reward.

You also have to wonder whether the telco would be scared off by some of the bold decisions made from a content perspective. Telcos on the whole are quite risk-adverse organizations, something which Netflix certainly isn’t. How many people would have taken a risk and funded content like Stranger Things? And with the release of Bandersnatch, Netflix is entering the new domain of interactive content. You have to be brave and accept considerable risk to make such bets work; we can’t see Verizon adopting this mentality.

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Softbank Vision Fund

Another with telco heritage, but this is a completely different story.

A couple of years back, Softbank CEO Masayoshi Son had a ridiculous idea which was mocked by many. The creation of a $100 billion investment fund which he would manage seemed unimaginable, but he found the backers, made it profitable and then started up a second-one.

Son is a man to knows how to make money and has the right connections to raise funds for future wonderful ideas. Buying Netflix might sound like an absurd idea, but this is one place we could really see it working.

However, the issue here is the business itself. While Son might be interested in digital ventures which are capable of making profits, the aim of the funds have mainly been directed towards artificial intelligence. Even if Son and his team have bought into other business segments, they are more enterprise orientated. There are smaller bets which have been directed towards the consumer market, but would require an investment on another level.

Tencent Logo

Tencent

Another Chinese company which has big ambitions on the global stage.

This is a business which has been incredibly successful in the Chinese market and used assets effectively in the international markets as well. The purchase of both Epic Games and Supercell have spread the influence of the business further across the world and numerous quarterly results have shown just how strong Tencent’s credentials are in the digital economy.

Tencent would most likely be able to raise the funds to purchase the monster Netflix, while the gaming and entertainment portfolio would work well alongside the streaming brand. Cross selling would be an option, as would embedding more varied content on different platforms. It could be a match made in heaven.

However, you have to bear in mind this is a Chinese company and the political climate is not necessarily in the frame to consider such as transaction. Like Alibaba, Tencent might be viewed as too close to the Chinese government.

No-one

This is an option which is looking increasingly likely. Not only will the business cost a huge amount of money, perhaps a 30-40% premium on market capitalisation, the acquirer will also have to swallow all the debt built-up over the years. There will also have to be enough cash to fuel the content ambitions of Netflix, it reportedly spend $7.5 billion on content last year.

Finally, the acquirer would also have to convince Netflix CEO Reed Hastings, as well as the shareholders, that selling up is the best option.

“If I was a shareholder or Reed Hastings, I’d be wondering whether it is better to be owned by someone else or just carry on what we’re doing now,” said Ed Barton, Practise Lead at Ovum.

“These guys are going down in business school history for what they have done with Netflix already, do they need to sell out to someone else?”

Netflix is growing very quickly and now bringing in some notable profits. The most interesting thing about this business is the potential as well. The US market might be highly saturated, but the international potential is massive. Many countries around the world, most notably in Asia, are just beginning to experience the Netflix euphoria meaning the growth ceiling is still years away.

What this international potential offers Netflix is time, time to explore new opportunities, convergence and diversification. Any business with a single revenue stream, Netflix is solely reliant on subscriptions, sits in a precarious position, but with international growth filling the coffers the team have time to organically create new business streams.

Ultimately, Hastings and his management team have to ask themselves a simple question; is it better to control our own fate or answer to someone else for a bumper payday? We suspect Hastings’ bank account is already bursting and this is a man who is driven by ambition, the need to be the biggest and best, breaking boundaries and creating the unthinkable.

Most of these suitors will probably be thinking they should have acquired Netflix years ago, when the price was a bit more palatable, but would they have been able to drive the same success as Hastings has done flying solo? We suspect not.