While any discussion of the pay-TV industry inevitably includes gloomy talk of heavy regulation and cord cutters, there is also some good news: the explosive growth in business services.
According to a panel discussion chaired by Amdocs’ Doug Fantuzzi on the opening day of INTX 2016 here in Boston, the provision of services ranging from broadband, Wi-Fi, Ethernet, and video to small- and medium-sized business (SMBs) and large-scale enterprises has skyrocketed over the past decade.
Terry Connell, from Comcast Business, said revenue from business services had jumped from $258 million in 2006 to $4.8 billion last year. At Cox Communications, Steve Rowley said revenue from this sector moved from $100 million in 1998 to $1 billion in 2010 and is predicted to reach $2 billion at the end of this year and will continue growing.
Both men said the initial focus for cable operators had been the SMB sector, but now they were targeting the enterprise services market, estimated at an annual $100 to $150 billion.
Rowley went on to make the point that operators were looking to expand the services they offer, giving the example of the Las Vegas Convention Center, where Cox has moved from providing video services to also now supplying the center’s Wi-Fi infrastructure.
In general, cable operators are in what Craig Moffett, principal and senior analyst at MoffetNathanson, called “a good spot,” despite the fact that regulation “has suddenly become much more pressing.” Speaking on a separate panel of financial analysts discussing the business health of the industry, Moffett said that despite pressures to change their business model given the rise of over-the-top competitors selling directly to consumers, the current model of bundles is too lucrative for both operators and program makers to totally destroy.
Right now, it’s a mutually-beneficial situation when you consider that program makers who are part of a bundle paid by operators even if the consumer doesn’t watch their specific channel. As Moffat explains, “Find me another model that is better than ESPN, where I can get $7 (a month) for every family in America who chooses not to take my product.”
This article by Amdocs Corporate Editor Jeff Barak was originally published in Amdocs Voices