Risk reaps rewards for telcos
To succeed in the media business, traditional telecom operators need to develop an appetite for failure and take on the soft packaging and management skills of the media world.
During a panel yesterday on "Opportunities for the Telecom and Broadband Industries" at the CommunicAsia Summit, En. Ahmad Izham Omar, CEO of Television Networks, said it takes skill to understand and buy content and understand the risks involved.
"In the entertainment world to make a hit you have to take risks, which means 70% of the time you lose and 30% of the time you make it and cover your costs. For the telcos this is horrible."
For the media guys, Omar said, you have to make losses because if you don't take risks you won't win. "There is no such thing as a no-risk investment."
Ian Chin, COO of BesTV (Shanghai Media Group), noted that telcos have started to realize that if they want users to use more bandwidth, "they need something to run on the information super highway, and that is content or video, which is actually assisting telcos in selling more bandwidth." So of course telcos want to start their own media businesses.
But Chin cautioned that for a telco to have a stand-alone media extension, they need a media guy, because he has "the magic - the packaging and management skills to understand what the audience and producer want."
"This is a game about how deep their pockets are. It's a good solution or marriage, because they can wait until you don't have a sustainable business model, then see if you get taken over or have to ask for help."
Telcos generally say they don't need media people within their management teams. Chin gave the example of PCCW and Orange, which acquired media or TV teams from traditional media.
Omar agreed with the challenges and opportunities media firms face in dealing with deep-pocketed telcos. "We have to wait to see how we can profit because there is a lot of money out there," he said.