Carrier strategy against OTT: vertical integration

In an interesting new development, Bell and Rogers, respectively 29 and 36% market share of the Canadian wireless market and fierce domestic competitors, join forces to acquire a majority share (75%) in Maple Leaf Sports and Entertainments (MLSE) for $1.32Bn.


Bell had already started vertical integration by acquiring the remaining 85% of CTV for $1.3 Bn last year and owns also  TSN, TSN2 and NHL Network Canada as well as a minority share of NHL's Montreal Canadien. Rogers owns the Toronto Blue jay baseball team and the broadcast network Sportsnet.


MLSE provides Bell and Rogers with co-ownership of Toronto Maple Leaf NHL team, Toronto Raptor NBA team, Toronto FC MLS team and the Air Canada center.


This is a very good example of vertical integration. The Canadian market is fairly mature, but with a high broadband penetration and a relatively low mobile broadband penetration (75%), growth is coming from smartphone and media consumption. Rogers, with 44% smartphone market share and a blended ARPU of 60$ and Bell with 26% market share and 53$ ARPU are among the most profitable carriers in North America.


At the same time, as competition increases with wireless new entrants (Videotron, Wind, ...) and OTT offers (BBC iPlayer, Netflix...), Rogers and Bell understand that the key to profitability is content. Buying these sport teams is a way for Bell and Rogers to secure premium attractive content for their domestic market, retaining control (duopoly?) of the most sought after premium content franchises in Canada.

Mobile TV, video advertising and Apple

FreeWheel released a study this week, showing a number of interesting facts in the on-deck content syndication space.

• Mobile TV represents only 1% of overall TV viewer ship (including fixed, web).

• Apple devices represent 80% of mobile TV consumption. This is due to the fact that, having entered the market first, there is a larger penetration of the brand withing tablet and smart phone users, which has prompted content editors and aggregators to prioritize this platform for content availability.

• Video advertising is starting to grow in revenue and viewing completion, mostly due to the fact that there is more long-form content available. Mid rolls are the most effective in term of completion rate, as long form content is more engaging, users stay until completion of the ad to resume their viewing.

I think on-deck mobile TV is till the least attractive of the mobile video services. It is expensive, offers a service that is the same as regular TV, with less quality.


Mobile TV becomes attractive to me when it offers different features from TV, that is acknowledging the fact I am mobile, like play and resume across screens (a feature I created for Videotron in Canada, see below)

or content / channel targeting. Operator that are successful in mobile TV cater to the long tail and offer niche content and channels for specific demographics. Access to the same top 10 channels as fixed TV is only good for a few bucks a month. Real monetization opportunities come from specialized content and channels.