With the AT&T and Time Warner 1st quarter earnings calls behind us, the impending $85.4 billion merger by the end of the year of these media titans signals dramatic change in the media and technology space amidst digital disruption and convergence. What role are consultants playing as the worlds of telecommunications and media intertwine to an extent never seen before? Quite a big one, in fact. From digital, strategy and operations, analytics, M&A advisory to regulatory consulting, the demand for advisory is strong. The quest to provide video-on-demand (a top revenue earner) through multiple channels with an emphasis on interconnectivity and mobile device delivery drives change moving at warp speed with fierce competition to effectively target consumers.
Digital and S&O Consulting
At the strategic level, as the industry faces continued convergence, consultants are being asked to help clients make key decisions. Telecommunications organizations are looking to institute digital services strategies in an era of intense competition and lower profit margins around traditional wireline businesses. With the continued growth of mobile broadband globally (particularly in developing economies), creating digital products and service offerings will be critical to generating additional revenue streams for traditional telecom players. Consulting firms can also look to product adjacencies across other industry verticals for compatibility (TV, IoT, cloud, mobile payments) for incremental revenue. Media companies seek advisory to identify and target differentiated content which can be delivered across multiple platforms in an effort to gain customer traction through branding and loyalty. The notion that personalized content can make it harder for customers to leave (“stickier”) is a tenet going forward, and consultants will help with building brand recognition and content portfolios with a focus on personalized content.
And then there is the outright convergence through M&A and partnerships, with consultants being engaged to both seek alliances and to hasten the learning curve and gain competitive advantage. Consultants are playing a role in both pre and post-merger due diligence and the regulatory consulting needed to push deals through. These ventures benefit both sides as with the AT&T/Time Warner proposed merger; AT&T gains access to Time Warner content and Time Warner gains access to AT&T’s distribution network, and together they can build next generation delivery (5G technology).
Analytics and Cybersecurity Consulting
The significance of analytics consulting to the industry as it undergoes these changes cannot be overstated. With access to millions of consumers through connected devices, the ability to collect data is clear, but how it is analyzed and used is essential for success. Consultants will provide expertise to their clients focusing on data analytics across the industry to gain insights in several areas including: data to create personalized product bundles; data on consumer viewing patterns; data to aid in customer retention and to intervene proactively when necessary; data to create better pricing models; and data to generally be more responsive in a digitally-enabled environment in which consumers are demanding customization, lower pricing and universal access through multiple platforms. As AT&T CEO, Randall Stephenson, explained during a recent conference call, “AT&T can use information it has about its broadband and wireless customers to help sell targeted advertising on its Time Warner content.” He said the kind of localized and personalized advertising it can offer marketers could be worth three to four times more than traditional advertising. (“AT&T Hopes You Forget It’s A Phone Company, CNET, April 25, 2017).
The data troves will enable valuable insights but will also increase the need for cybersecurity and privacy protocols for which consultants can provide guidance in implementing. With all of the additional data comes the increased risk of hacks (with Media being one of the most hacked industries). The advent of mobile payments, expected to reach $118 billion in 2018, makes these threats even more real. Security protocols and preventive measures must be woven into organizations at every level and cybersecurity consulting will be needed.
In addition, the vast shift in business models across the industry requires immediate attention to existing talent to provide cross-training in digital service offerings and customer personalized bundles, in addition to cybersecurity training, awareness, and data analytics. Skill gaps must be identified and remedied for successful innovation and implementation to occur – a big role to fill for HR consultants. The cultural shift required in a digitally-enabled, consumer facing business is significant. Traditional, “utility”-oriented businesses will need to become nimble players capable of quickly partnering and offering new products and services to survive in a consumer-dominated, heavily competitive landscape. Organization-wide cross-training in many areas such as digitally-enabled workflows and new technologies, customer engagement, new product/services offerings, data analytics and cybersecurity protocols are necessary.
Expect more deals, more convergence and more excitement as digital disruption rolls forward, paving the way for significant consulting demand.