Successful or not, Dish Network’s bid for Sprint is a symptom of digital video’s unstoppable rise.
Media, tech, and telecom companies are locked in ever-fiercer competition to deliver content and bandwidth.
Meanwhile, consumers want video — from YouTube clips, to live TV and movies — on every device they own.
That demand is placing incredible strain on our old media and communications infrastructure, even in a fairly wired country like the United States. It is also putting the massive pay TV industry in the difficult position of deciding what to do about mobile video, and the wireless spectrum needed to support it.
Studies show that video is one of the most popular activities on smartphones and tablets, after social networking and games. But because video is so data-intensive it is actually the top guzzler of mobile data. Video already consumes an amazing 51% of global wireless data traffic, and will account for 67% of traffic by2017, according to Cisco.
Part of the logic of Dish’s bid for Sprint is this: If we can grab Sprint’s 47 million mobile customers and their chunk of wireless spectrum, we’ll be able to give people video wherever they are and on whatever device they’re on, for a cheap price.
Charlie Ergen, chairman of Dish, spelled out this vision in a letter detailing his $25.5 billion offer to Sprint’s board of directors.
“We will be the only company able to offer a fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services to meet rapidly evolving customer preferences,” said Ergen.
Ergen was also quoted as saying in Bloomberg that he would not charge additional fees for mobile TV, but that the price would be bundled into Dish subscriptions.
A separate issue is the trend of “cord-cutting,” which is when consumers cancel pay TV services and instead download or stream their video online. This behaviour is especially prevalent among younger demographics, as our recent report on mobile video detailed.
If it can grab Sprint, Dish has a chance to keep cord-cutters on as wireless subscribers (it can then offer them Dish’s new satellite home broadband).
But is a Dish-Sprint tie-up good for consumers?
There’s no real evidence satellite TV providers are particularly popular. In fact, companies like Verizon, with their roots in the phone industry, have been growing their share of the pay TV market much faster than satellite players like Dish have.
In 2012, U.S. satellite TV subscribers grew only 1% to 34 million, while audiences who get their TV from telecommunications providers like AT&T and Verizon surged 16.5% to 10 million, according to recent data from Morgan Stanley.
The success of carriers in TV land is likely a factor behind Dish’s attempt to take the battle back into their turf — with the Sprint bid.
In the end, consumers will gravitate to convenience and value. The battle for wireless and pay TV subscribers won’t turn on the savviest merger (Dish’s bid for Sprint is now in competition with an earlier takeover offer from Japanese telecom firm SoftBank). Instead, it will hinge on innovation. The winning formula will be the one that gives consumers what they want: the ability to easily make calls and consume media wherever they are, at a reasonable price.
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