Mobileum grows assurance profile with WeDo acquisition

Mobileum has announced it will acquire risk and business management solutions provider WeDo Technologies, bringing together two of the bigger names in this niche segment.

Following the purchase of Evolved Intelligence in October 2018, Mobileum is seemingly on the move to dominant the market. The acquisition of WeDo adds additional weight to its analytics armoury, aiding telcos to detect and prevent fraud on their networks, as well as increasing the physical presence of the firm around the world.

“We are excited to partner with WeDo and support them in the next phase of their growth,” said Bobby Srinivasan, CEO of Mobileum. “As we continue to grow Mobileum, organically and inorganically, the addition of WeDo’s strong product engineering, customer footprint, consulting and services teams to our existing talented workforce around the world will allow us to expand the depth and breadth of our offerings.”

“The combined business offers our customers a richer and more diverse portfolio of solutions in the domains of Revenue Assurance, Fraud Management, Network Security, Roaming and Interconnect. As the mobile industry continues to evolve, this transaction will allow us to continue to invest in the future architecture, assuring the success of our customers along a journey of continuous transformation.”

The newly combined business will have 1,100 employees in 30 offices, serving 700 customers in 180 different countries. The existing WeDo platform and architecture will be maintained, though it will also be integrated with the Mobileum Active Intelligence platform.

Pinning down how big the revenue assurance and risk management software market actually is, however, is not the easiest of tasks.

The Communications Fraud Control Association suggests fraud costs the telecoms industry more than $38 billion a year, with roaming fraud accounting for $10.8 billion of that figure. Estimates from Credence Research suggests the global revenue assurance software market was worth $2.5 billion in 2017, with growth projected at 11% CAGR through to 2026. This sounds promising, however Heavy Reading Analyst James Crawshaw has some doubts.

If we are to assume WeDo is the leading player in the revenue assurance software market, it will have a notable market share. Looking at WeDo’s financials, the team increased orders to more than €60 million for 2018. The numbers aren’t quite adding up here.

Either this is an incredibly fragmented market with thousands of suppliers making up the $2.5 billion, WeDo is not a leading name in the revenue assurance software market or the market is worth considerably less than $2.5 billion.

It is not necessarily the end of the world if the addressable market is smaller than analysts are currently estimating, as long as there is growth potential. There is of course opportunity to grow, though as Crawshaw points out, WeDo’s orders have not really increased significantly over the last few years, suggesting this is somewhat of a stagnant market.

FTC warns of break-up of big tech

The technology industry has often been a political punching bag over the last 18-24 months, and now the Federal Trade Commission (FTC) is adding to the misery.

In an interview with Bloomberg, FTC Chairman Joe Simons has suggested his agency would be prepared to break-up big tech, undoing previous acquisitions, should it prove to be the best means to prevent anti-competitive activities. This would be a monumental task, though it seems the tides of favour have turned against Silicon Valley.

This is not the first time the internet giants have faced criticism, and it won’t be the last, but what is worth noting is the industry has not endeared itself to friendly comments from political offices around the world. Recent events and scandals, as well as the exploitation of grey areas in the law, have hindered the relationship between Silicon Valley and ambitious politicians.

In this instance, the FTC is currently undertaking an investigation to understand the impact the internet giants are having on competition and the creation of new businesses. Let’s not forget, supporting the little man and small businesses is a key component of the political armoury, and with a Presidential Election around the corner, PR plugs will be popping up all over the place.

Looking at one of those plugs, Democrat candidate-hopeful Elizabeth Warren has already made this promise. Back in March, Warren launched her own Presidential ambitions with the promise to hold the internet giants accountable to the rules. Not only does this mean adding bills to the legislative chalkboard, but potentially breaking up those companies which are deemed ‘monopolistic’.

This has of course been an issue for years in Europe. The European Commission has stopped short of pushing for a break-up, though Google constantly seems to be in the antitrust spotlight for one reason or another. Whether it is default applications through Android or preferential treatment for shopping algorithms, it is under investigation. The latest investigation has seen job recruiters moaning over anti-competitive activities for job sites.

What is also worth noting is that the US has a habit of diluting the concentration of power in certain segments throughout its history. The US Government seems to be tolerant of monopolies while the industry is being normalised and infrastructure is being deployed, before opening-up the segment.

During the early 1910s, Standard Oil was being attacked as a monopoly, though this was only after it has finished establishing the rail network to efficiently transport products throughout the US. In the 1980s, the Bell System was broken-up into the regional ‘Baby Bells’ to increase competition throughout the US telco market.

The internet could be said to have reached this point also. A concentration of power might have been accepted as a necessary evil to ensure economy of scale, to accelerate the development and normalisation of the internet economy, though it might have reached the tipping point.

That said, despite the intentions of US politicians, this might be a task which is much more difficult to complete. It has been suggested Facebook has been restructuring its business and processes to make it more difficult to break-up. It also allegedly backed out of the acquisition of video-focused social network Houseparty for fears it would raise an antitrust red-flag and prompt deeper investigations.

You have to wonder whether the other internet giants are making the same efforts. For example, IBM’s Watson, its AI flagship, has been integrated throughout its entire portfolio, DeepMind has been equally entwined throughout Google, while the Amazon video business is heavily linked to the eCommerce platform. These companies could argue the removal of certain aspect would be overly damaging to the prospects of the business and also a bureaucratic nightmare to untangle.

The more deeply embedded some of these acquisitions are throughout all elements of the business, the more difficult it becomes to separate them. It creates a position where the internet giants can fight back against any new regulation, as these politicians would not want to harm the overarching global leadership position. Evening competition is one thing but sacrificing a global leadership position in the technology industry defending the consumer would be unthinkable.

This is where you have to take these claims from the FTC and ambitious politicians with a pinch-of-salt. These might be very intelligent people, but they will have other jobs aside from breaking-up big tech. The internet giants will have incredibly intelligent people who will have the sole-task of making it impossible to achieve these aims.

Amazon has managed to bottle fear, but recognition debate remains

While facial recognition technologies are becoming increasingly controversial, it is always worth paying homage to innovation in this field and the real-world applications, when deployed responsibly.

We suspect people aren’t necessarily objecting to the concept of facial recognition technologies, but more to the application and lack of public consultation. You only have to look at some of world’s less appetizing governments to see the negative implications to privacy and human rights, but there are of course some significant benefits should it be applied in an ethically sound and transparent manner.

Over in the AWS labs, engineers have managed to do something quite remarkable; they have managed to bottle the concept of fear and teach its AI programmes to recognise it.

“Amazon Rekognition provides a comprehensive set of face detection, analysis, and recognition features for image and video analysis,” the company stated on its blog. “Today, we are launching accuracy and functionality improvements to our face analysis features.

“With this release, we have further improved the accuracy of gender identification. In addition, we have improved accuracy for emotion detection (for all 7 emotions: Happy, Sad, Angry, Surprised, Disgusted, Calm and Confused) and added a new emotion: Fear.”

When applied correctly, these technologies have an incredibly power to help society. You only have to think about some of the atrocities which have plagued major cities, but also the on-going problems. Human eyes can only see so much, with police and security forces often relying on reports from the general public. With cameras able to recognise emotions such as fear, crimes could be identified while they are taking process, allowing speedier reactions from the relevant parties.

However, there are of course significant risks with the application of this technology. We have seen in China such programmes are being used to track certain individuals and races, while certain forces and agencies in the US are constantly rumoured to be considering the implementation of AI for facial recognition, profiling and tracking of individuals. Some of these projects are incredibly worrying, and a violation of privacy rights granted to the general public.

This is where governments are betraying the promise they have made to the general public. Rules and regulations have not been written for such technologies, therefore the agencies and forces involved are acting in a monstrously large grey area. There of course need to be rules in place to govern surveillance practices, but a public conversation should be considered imperative.

Any time the right to privacy is being compromised, irrelevant as to whether there are noble goals in mind, the public should be consulted. The voters should choose whether they are happy to sacrifice certain privacy rights and freedoms in the pursuit of safety. This is what transparency means and this is exactly what has been disregarded to date.

Third-parties are next battleground in video streaming war

Securing a partnership with the likes of Netflix and Amazon might be the golden-ticket for the telcos, but no-one should forget they have as much negotiating power as the OTTs.

For the telcos, convergence is an oasis of profit in the barren desert of the connectivity industry. As traditional means of generating cash are either destroyed (SMS and voice tariffs) or increasingly squeezed (CAPEX investments for 5G), many telcos are searching for differentiation to charge more and prove they can add value beyond the utilitised connectivity column. Content is a very popular route for many to take.

Aside from attempting to create content platforms, more telcos are seeking third-party relationships to move into the aggregator business model. This is a very sensible approach to business, the telcos can add a lot of value to the OTTs and securing a partnership with one of the more prominent streaming players is a key cog to their own ambitions. However, despite the desperation of the telcos, they should consider themselves on equal terms to the OTTs.

“Every telco is fighting to become an aggregator, but there is also a battle between the streaming OTTs to gain visibility,” said Paolo Pescatore of PP Foresight.

As Pescatore notes, outside of the two major players in the streaming world (Amazon Prime and Netflix), achieving visibility and scale can be very difficult. This is and will continue to be an incredibly congested field, therefore the relationship between telcos and OTTs could add an edge for any challenger.

Looking at the growth opportunities for the OTTs, there is plenty of cheddar left on the table, though in the developed markets, there are only crumbs left. Take the US for example, here Netflix subscriber growth has slowed, suggesting the glass ceiling for direct customer acquisition has been reached, or will be in the near future. The question is how these final customers can be engaged? Third-party relationships are key here.

At IBC last year, Maria Ferreras, VP of EMEA Business Development at Netflix highlighted that partnerships with telcos were an important cog as the streaming giant continues to evolve. At the time, the discussion was primarily from a billing relationship, though there are plenty of other opportunities.

Partners with their own content platform offer Netflix and Amazon something incredibly important; real-estate. Whoever can secure the most prominent position on the content platform will gain additional visibility and engagement with customers. It is evidence the OTTs are buying into the convergence strategies employed by the telcos, but also the value of the telco relationship with the customer.

Looking around the world, these partnerships are becoming much more common. Netflix has been embedded in the Sky platform in the UK, while Amazon Prime has been integrated into the Virgin Media platform. Mexico’s Totalplay has become the first operator in LATAM to add Amazon Prime to its TV service, while Vodafone Spain has secured partnerships with Netflix, HBO Spain and Amazon Prime.

There are of course numerous ways in which these partnerships can develop. Some are simply billing relationships, allowing the streaming service to be added onto the monthly bill, while some can have the OTT experience embedded into the content platform offered by the partner. What is clear, however, is this is an arms race from the OTTs.

The more partnerships which are in place, the more opportunity there is to engage potential customers and increase subscriptions. These partnerships are not only about securing visibility or accessing billing systems, but also leaning on another brands credibility to engage customers who wouldn’t have been previously accessible.

Interestingly enough, there aren’t many telcos or content providers who have relationships with more than one of the streaming giants. This might be a coincidence, or there might well be a desire from the OTTs to secure exclusivity through the platform of choice, even if it is not made official or public.

The challenge which many will face is going toe-to-toe with Amazon and Netflix. If these partners are securing the best relationships with the telcos, they will gain the most eyeballs on their services. Disney is company which will certainly want to lean on relationships with third-parties, but it will have to move sharpish to ensure it is not shut out.

Although Disney is one of the most prominent brands on the planet, it is almost unknown in the content world. This will present a challenge in two ways. Firstly, cutting through the background noise to educate the user on its offering, and secondly, the billing relationship.

For both of these challenges, third-party relationships with telcos and content platform owners can help. A direct line of communication is already in place, visibility can be offered through apps, billing relationships already exist, and third-parties are looking for partners to help build bundling options.

If Disney is going to be successful in its pursuit of streaming fortunes, it will need more than engaging content. It already has the content, and the ambitions for original content creation do look promising. The challenges will be in terms of securing visibility and credibility in the eyes of the consumer.

Telcos should realise sooner rather than later that they are an equal partner to the OTTs in this context, as they are just as desperate to secure favourable partnerships as the telcos. This is the next battleground in the streaming race; partners mean prizes.

Huawei unveils its answer to Android; Harmony

At the Huawei Developer Conference, the Chinese vendor has showcased Harmony OS, its in-house operating system to provide an alternative to Google.

Huawei claims the new OS is faster and safer than Android, but primarily aimed at IOT devices. That said, it can be mobilised at a drop-of-the-hat, should the Android situation continue to deteriorate. Until the point of no-return, Huawei devices will continue to make use of Android.

“We’re entering a day and age where people expect a holistic intelligent experience across all devices and scenarios,” said Richard Yu, CEO of Huawei’s consumer unit.

“To support this, we felt it was important to have an operating system with improved cross-platform capabilities. We needed an OS that supports all scenarios, that can be used across a broad range of devices and platforms, and that can meet consumer demand for low latency and strong security.”

Currently, Harmony OS is more of a competitor to Google’s IOT focused OS, Fuchsia, but it is not difficult to see this was developed with mobile in mind also. This is the scale of the threat which is facing Huawei’s smartphone business unit.

Looking through the technical details, Yu claims the OS is safer due to the fact there is there is no root access available. Using external kernel services, the microkernel is protected by isolation, while the system also applies formal verification, a mathematical approach to spot vulnerabilities that traditional methods might miss.

As you can see from Yu’s statement above, Huawei is putting a positive spin on the development, though many will be able to read between the lines.

Over the last 12-18 months, the US has been aggressively attempting to undermine the fortunes and prospects of Huawei. Many have connected the White House’s propaganda to the on-going trade ware between the US and China, though the underlying reasons are irrelevant; the ripples of posturing are going to have negative impacts.

With regard to the launch of Harmony OS, Huawei’s entry onto the Entity List, effectively banning it from working with any US suppliers, was the most important development. This of course includes Google and Android.

Huawei might downplay the importance of this move, though the implications are significant. The firm would be able to continue using Android, it is open source after all, but if it is no-longer a Google partner it would not be entitled to feature and security updates at the earlier possible time.

Don’t listen to Huawei here, this is massive and would relegate the performance of its devices down the segment.

This is a major threat to the momentum being generated in the consumer business. Huawei smartphones are becoming increasingly popular, though if you remove the Android OS, software which probably grants the Chinese vendor credibility in some markets, the consequences could be swift and drastic. In creating its own OS, some of these concerns will be removed, security updates will be timely, but you have to wonder whether it will be any good.

The power of Android is not just brand credibility through association with Google, or timely security updates and product innovations, but it is really good. There is a reason Android killed off competition and overwhelmingly controls market share; it is the best OS available.

Not only will Huawei have to create an OS which is just as good as Android, but it will also have to create the supporting ecosystem. If there are no apps, services or products which are compatible with the OS, Huawei smartphones become no more useful than a doorstop.

It is a difficult one to predict whether the launch of its own in-house OS will actually work. Not only does it have to navigate the pitfalls of a new software launch, but it also has to combat the growing anti-China rhetoric.

Such is the reliance of todays consumer on smartphones, there only needs to be one problem for noses to be turned up at Harmony OS. Android is so reliable, why would consumers want to deal with problems, even if they are incredibly rare. Let’s not forget, Huawei’s heritage is in hardware and it has had a gluttony of software problems over the last few years; we suspect there will be a few blunders.

Anything short of perfect will be a threat to the Huawei smartphone. Consumers rarely like change, though a poorly performing OS might force newly acquired smartphone customers back to Android and rival devices.

That said, it is not difficult to imagine the Huawei OS alternative becoming a preference in China and Chinese-friendly nations. In such market, Chinese alternatives are preferred to US which can be seen with the rise of companies such as Huawei, Alibaba, JD.com, Baidu and Tencent. Using the Chinese domestic market as a vehicle to scale is a common technique for Chinese technology companies in recent years before casting eyes onto the international horizon.

This is of course not the first threat Google has faced in the OS market. Samsung attempted to branch-off with the launch of Tizen, while Windows Mobile was another challenge. Both of these OS’ focused on performance and security, but neither were effective enough to have any material impact on Android. Harmony OS is a different trial however.

Google might not be worried about losing market share in the Western markets, though in the emerging nations Huawei could find some traction. Not only are these nations which have better relationships with Chinese companies, but they present lucrative growth opportunities for Google. Should Huawei manage to launch the OS without major incident, we could be talking about three OS’ dominating the world not two.

Broadcom plugs into security buzz with $10.7bn Symantec buy

Some lucky gamblers would have made a pretty penny heading into the weekend as Broadcom officially announces it will acquire security firm Symantec.

At the beginning of July, share price in Symantec surged north as the rumour mill started turning. Broadcom was the co-lead of the drama which added 13% to share price in a matter of hours, only for the gains to be cruelly slashed as various news sources burst the bubble. It was nothing but gossip at the time, though the first rumours have turned out to be true.

In a $10.7 billion deal, Broadcom will acquire the enterprise security business of Symantec, expanding the chipmaker into new markets. Tan is looking to spread the wings of the technology giant, with Symantec to offer a stepping stone into an increasingly lucrative segment.

“M&A has played a central role in Broadcom’s growth strategy and this transaction represents the next logical step in our strategy following our acquisitions of Brocade and CA Technologies,” said Hock Tan, Broadcom CEO.

“Symantec’s enterprise security business is recognized as an established leader in the growing enterprise security space and has developed some of the world’s most powerful defence solutions that protect against today’s evolving threat landscape and secure data from endpoint to cloud.”

Some might question why one of the worlds’ largest chipmakers is venturing into the world of enterprise software solutions, but this is a transition which has been underway for some time. Broadcom is not giving-up on semiconductors whatsoever, but it is diversifying the revenue streams.

In November 2017, Broadcom closed the $5.5 billion acquisition of Brocade, a specialist in data and storage networking products, which was followed in July 2018 by the $18.9 billion purchase of CA Technologies, a company which offers various IT software products and solutions. Adding Symantec into the mix simply continues the drive towards enterprise IT.

Looking at the investor presentation, in two and a half years Broadcom has undergone considerable evolution. After the closure of the Symantec acquisition, semiconductors will account for 71% of the total revenues, with software solutions taking the remaining 29%. And of course, with new regulations, new consumer attitudes and new purchasing patterns, security has the potential to become a lucrative area.

The Broadcom management team suggest this acquisition is a foot-in-the-door of a $161 billion addressable security market, with Symantec market share leader in some interesting segments. In the stable markets of endpoint security and web security services, a combined value of $1.25 billion, Symantec is the market leader, where is also leads the way in the fast-growing data loss prevention segment.

One question which some investors might have is whether the Commander-in-Chief will get involved.

Will the White House weight-in?

Trump has been increasingly weighing into the technology industry over the last two years, perhaps seeing this influential segment as a means to counter the aggressive progress made by China in the global economy.

Although the Brocade and CA Technologies acquisitions passed without issue, who can forget the failed acquisition of Qualcomm for $117 billion. This was deemed a move contrary to national security, with Trump signing an executive order to block the acquisition. The Oval Office has remained quiet to date, but it would not surprise anyone to see the President wading in.

If Broadcom acquiring Qualcomm, a company critical to the US’ standing in the 5G race, was seen as a national security threat, who is to say the same theory could not be applied to Symantec. Security is a tender topic at the moment, and Symantec currently works with 86% of the Fortune 500. Blocking the deal is a long-shot, but it is worth keeping a weary eye on the White House.

Of course, should the transaction complete in a suitable period of time, Broadcom will have to make the security segment actually work. Just ask Intel how difficult this is.

Let’s not forget, security acquisitions can bite back

After acquiring security giant McAfee in 2010 for $7.68 billion, Intel endured years of pain trying to make the security segment work for it. After six years of struggle, Intel attempted to sell the security unit, before settling for a spin-off strategy after failing to find a hungry-enough buyer.

Although Intel failed, what is worth noting is the world is a different place nowadays. Thanks to numerous scandals and data breaches over the last few years, as well as the introduction of more punishing regulation around the world, companies are more aware of security threats and are allocating more funds to the various departments. This includes data management and front-line solutions.

In the past, security has been nothing more than political rhetoric or a means for CEOs to pacify investors and customers. Speeches were regularly made concerning the importance of creating security and resilient products, though this rarely translated into investments into security products and solutions.

Attitudes do seem to be changing, more investment is being made into hardening defences and managing risk, though the question is how quickly this evolution is taking hold. This will define whether this is a good acquisition for Broadcom.

The risks are very evident. Recent research from IBM suggests the average cost of a security breach in the US is $8.19 million, almost double the average worldwide. Those who are able to contain a breach to 200 days can reduce the financial impact by an average of $1.2 million; there is certainly financial incentive to take note of the increasingly complex security demands.

Security is now a major component of the digital mix. Few CEOs would have wanted to spend so much on a cost-centre, but reality has caught up; the risks are such that security cannot be swept aside or bolted onto new initiatives nowadays.

Google continues to tap into the power of Maps

Ask any Android user and you’ll hear a glowing reference for Google’s mapping features, and the power of investing in the future is on show once again.

This is perhaps one of the most admirable aspects of Google Maps. This is a product which would have cost a lot of money and time to develop, at least to ensure it is the most useful of its kind, while there was little immediate return on investment. Now Google is reaping the commercial benefits of Maps, but it is still keeping an eye on new features, improved experience and, eventually, additional revenues.

“Not only does Google Maps help you navigate, explore, and get things done at home, but it’s also a powerful travel companion,” Rachel Inman wrote on Google’s blog.

“After you’ve booked your trip, these new tools will simplify every step of your trip once you’ve touched down–from getting around a new city to reliving every moment once you’re home.”

Google is not a company which makes money by accident. It might be the most popular search engine worldwide, but every time there is a hint of a glass ceiling, new ideas seem to emerge.

The acquisitions of Android and DeepMind certainly added new elements to the business model, its smart speakers and push into the connected car offer more engagement points moving away from traditional user interface, and Maps is an on-going project which seems to never get old.

This latest push forward from Google makes the mapping product more useful for those who are going on holiday.

Starting with the simplest add-on, reservations for both flights and hotels can be stored in the Maps app, allowing users to horde all relevant details into the same place irrelevant to whether the user has connectivity at that point. For those who have smartphone compatible with the ARCore and ARKit, navigation becomes simpler with pop-up directional graphics on the screen, while AI has been introduced to improve restaurant recommendations. Finally, a timeline has been introduced which can link experiences and content to places.

These are not necessarily revolutionary, but very few Google Maps features are. These are little additions which makes the mapping product easier to use and more useful. The incremental gain is quite evident through every feature which is adding every couple of months, and this is why so many people use Maps as a default application.

As with much that Google does, the features have been introduced to improve user experience and add extra value. However, there is also a great opportunity to commercialise these features without being intrusively commercial.

Looking at the restaurant recommendations, like with the search engine, some establishments will likely be able to pay for more prominent positioning. The same could be said for local landmarks and attractions in cities across the world. Although Google does create useful products, it never does anything for free. The user might not have to pay, but there is commercial element to everything which is being done.

However, what Google does very well is not to over commercialise the platform or product. As soon as something become offensively commercial, users are turned off. Just look at what happened to the core Facebook platform over the last few years. Facebook forgot what the core objective of the platform was, to connect friends and family, and it has started to impact engagement as well as the acquisition of new users through its commercial activities.

Facebook is still the leader when it comes to the social media segment, though other platforms seem to be better at engaging younger audiences, the demographics critical for sustainable revenues in the long-run. Snapchat, Instagram (admittedly a Facebook business), Twitter or Pinterest are not attracting the same experience criticism as Facebook has been over the last few years.

With Google Maps, the team seem to have struck the right balance. It’s a very useful application for numerous reasons and makes money for the search giant.

Another example of improved functionality with no-immediate financial benefit is focused on public transport. At the beginning of July, a new feature which will tell users how busy public transport is likely to be and whether users should anticipate delays on a journey was introduced. This is useful to have but has no immediate commercial benefit. However, when Google also suggests alternative means of transport, Uber for instance, and helps the user make a booking, there will be some sort of commercial benefit.

In helping customers with their travel plans, hotels and airlines can be partners, features and prompts introduced, and money can be made. Booking a restaurant through the Google Maps feature is another way, while the promotion of local tourist attractions is a third. It’s the traditional referral business with a slightly different twist.

Mapping is not a cheap business to enter into, there is a lot of data which needs to be acquired and managed after all. And when you start adding in additional features as Google constantly seems to do, the application becomes increasingly expensive and harder to deliver the promised experience. But this is where Google is a very admirable business; it never skimps when investing in creating a product to meet expectations.

It might have taken years to start to see the profits, but Google is now reaping the benefits of patience.

Convergence may well pay off for Virgin Media

It might not be setting the world on fire, but Virgin Media is proving the slow, steady approach to business is certainly worth paying attention to.

On the financial side of the business, total revenues grew marginally by 0.4% to £1.279 billion for the second quarter. Broadband customer acquisitions bolstered the financials, though these gains were mainly offset by customer losses in TV and mobile. This doesn’t seem to be the most attractive of statements, though the management team doesn’t seem to be worried as the convergence mentality becomes more prominent.

“Our disciplined and balanced approach to customer acquisition and capital expenditure has seen a return to growth in our sector-leading cable ARPU and strong free cash flow generation,” said Lutz Schüler, CEO of Virgin Media.

“Underpinning this is the continued success of our network expansion, new initiatives to improve sales and customer service and our fixed-mobile Oomph bundles which have already seen a doubling of customers attaching a mobile SIM to their package with meaningfully higher ARPU.”

An important aspect to always consider when discussing convergence is the incremental nature; this is a strategy which casts an eye to the horizon. Quarter-on-quarter you might not see the benefits, but in a few years’ time, a few will look back and wonder how they got by without such a considered approach to customer management, acquisition and retention.

Looking at the business objectives, there are four strategic pillars; converged customer contracts, increased sales efficiencies, improvement in base management and digital transformation. None of these strategies are a silver-bullet to find the next billion, but this is looking like a business which is in a healthy position, posed for growth in the next era of connectivity.

In the broadband business, Protect Lightning (the fibre buildout programme) now passes 1.8 million premises throughout the UK. Subscriptions increased by 5,000 across the period, taking the total to 14.7 million. Video cable subscriptions are down, though with a new bundle offering launched focused on sport, this could be an interesting area of growth for the business.

Over the next couple of weeks, we strongly suspect there will be an aggressive advertising campaign to glorify the benefits of Virgin Media’s TV subscriptions. Bundling together Sky Sports, BT Sport and Amazon (separate subscription) into a single aggregated content platform might be attractive to numerous sports fans, and at a cheaper price than competitors, it has the potential to cause disruption.

This has been a pain-point for Virgin Media for the last few years. Speaking from experience, your correspondent can detail the inadequacies of the TV package, though industry analysts are increasingly confident this new approach from Virgin Media is much more comprehensive. The management team are also putting a brave face on the loss of TV subscriptions, suggesting the strategy is to move away from entry-level customers, focusing on higher-end, higher-value targets.

These are two of the convergence prongs at Virgin Media, with mobile being the final. This is another area where subscriptions declined, primarily pre-paid, though as Virgin Media is currently an ‘also-ran’ in the mobile segment there is significant room for growth if the proposition is fairly priced in.

Working with EE/BT, the opportunity is certainly there to create an effective mobile proposition. EE/BT regularly has the highest rated network in terms of overall performance, though perhaps Virgin Media’s ability to offer 5G tariffs will play a notable role here. We’re not too sure what the agreement is between the two parties, though should it be able to offer 5G services over the EE/BT network sooner rather than later, the convergence strategy may well receive a boost.

Looking at the benefits of convergence, many point to higher ARPU, though perhaps the more significant, longer-term advantage is customer retention. Virgin Media experienced 15% customer churn at the end of 12-month contracts, though many accept churn rates decrease for converged customers. Considering the cost of acquiring new customers in a saturated market like the UK, anything which can be done to improve retention is a massive bonus.

In terms of convergence, the number of fixed-mobile converged customers has improved to 19.9%, as the proportion of new customers taking mobile with cable services doubled post launch. We have asked for more details on the number of converged customers as a percentage of the total, churn rates in comparison between the two and differences in ARPU, and at the time of writing Virgin Media is yet to respond.

We suspect the numbers will be positive, though nothing that will stop the world from spinning. That said, that is not a bad thing. Convergence is about incremental gain, the slow and steady approach to business improvement.

Convergence is about setting goals a few years in the future, it’s a gradual gander forward. You might not see the benefits, but looking back, you’ll wonder how you operated without such a considered approach to business. Virgin Media is looking like it is in a healthy position.

The UK is turning to VoD – Ofcom

Half of UK homes now subscribe to TV Streaming services, reveals a new Ofcom report, as the country increasingly opts for video-on-demand.

The precise proportion is 47%, which is lower than some might expect given the apparent ubiquity of Netflix, Amazon Prime, etc, but still a significant jump from 39% just a year earlier. Furthermore, since many people have more than one service, the total number of subscriptions increased by 25%. If this keeps up it won’t be long before nearly all of us spend our evenings consuming copious amounts of VoD.

This is the headline finding from Ofcom’s latest Media Nations Report, which takes a deep look at the country’s media consumption habits. Any parent won’t be at all surprised to hear that younger people far prefer on-demand video over traditional broadcast and, as a result, consumption of the latter is in rapid decline. Thanks to the oldies broadcast telly is still the most popular form of video consumption, but not for long.

ofcom media nation all video

ofcom media nation all video 16-34

ofcom media nation all video change

ofcom media nation all video change 16-34

“The way we watch TV is changing faster than ever before,” said Yih-Choung Teh, Strategy and Research Group Director at Ofcom. “In the space of seven years, streaming services have grown from nothing to reach nearly half of British homes. But traditional broadcasters still have a vital role to play, producing the kind of brilliant UK programmes that overseas tech giants struggle to match. We want to sustain that content for future generations, so we’re leading a nationwide debate on the future of public service broadcasting.”

The UK state seems to be in a mild panic about the decline in viewership of what it considers to be public service broadcasting, which means any old rubbish that’s publicly-funded. It’s highly debatable how much of the content produced by the BBC provides any kind of public service other than distracting us for a few minutes, but Ofcom seems to still think it’s really important.

This last table is especially illustrative of the current state of play, with younger adults all about YouTube and Netflix. If Ofcom had surveyed teenagers we suspect that bias would have been even more pronounced and as these trends continue the TV license fee is going to become increasingly hard to justify.

ofcom media nation all video minutes

Disney complicates video streaming market with $13 per month bundle

Content giant Disney has unveiled what it presumably hopes will be a Netflix-busting bundle of Disney+ ESPN+ and Hulu in the US.

Disney+, the core streaming service for Disney movies and other video content, had previously been announced at a cost of $7 per month. Disney also owns the majority of sports content network ESPN, and general TV content service Hulu, so it’s bundling them together with Disney+ for a grand total monthly cost of $13 – five bucks less then they cost individually and coincidently exactly the same as regular Netflix costs in the US.

“I’m pleased to announce that in the United States, consumers will be able to subscribe to a bundle of Disney+, ESPN+ and ad-supported Hulu for $12.99 a month,” said Disney CEO Bob Iger on the company’s recent earnings call. “The bundle will be available on our November 12 launch date.”

Commentary on this seems to be universally positive, with many observing that it’s very good value for money.

“The move throws down the gauntlet to Netflix and other rival services,” said Tech, Media and Telco Analyst Paolo Pescatore. “For sure it is competitively priced and seeks to reduce fragmentation. Initially, it seems that Disney is looking for scale but will need to increase revenue to recoup the significant investment. Consumers have some tough decisions ahead as they can’t sign up to all the streaming services.”