Wednesday, 30 September 2015

Creative challenges for UK TV

About 10 days ago my team and I published an analysis of the creative challenges for UK TV. Our concerns were that the creative basis of our TV economy was being damaged, despite an environment of increasing revenues, driven by TV's role in reinforcing the telecoms market through triple and quad-play bundling.

What we found was troubling. Although revenues are indeed up by 10% since 2012, our share of global TV revenues has fallen and that the entire of the revenue increase can be accounted for by sports rights. As we showed in our 2013 Royal Television Society report, sports rights spending flows straight through the industry into the rights bodies, clubs and players, rather than into new skills, ideas and creative formats. And the worst is yet to come: the new Champions League and Premier League rights deals add more than a billion pounds a year onto the rights budget, so unless revenues increase new funding sources will be required if net spending on new creative content is to remain flat.

Outside investment is one source of such investment, particularly from US studios acquiring UK studios. Our analysis shows that this too is a double-edged sword. It does bring finance and access, but a cost in terms of creative breadth and company formation. Smaller indies live an ever-more precarious existence and with them goes the creative quality and talent that has fuelled our world-class TV economy.

You can find the report here and an excellent summary piece from the Guardian here.

Tuesday, 29 September 2015

Value drivers for telecoms retail

I've been doing a really large number of driver trees recently - we've taken to using them on every project to get really into the guts of value creation for businesses and thus decide where to focus initiative development (How To Win, if you're keeping score).

Anyhow, I had to pause for thought recently to work out how to represent the subscription aspect of telecoms retail for a client. Since it took me a minute, I thought I'd share... its lack of elegance suggests that its not quite right, although it was enough to demonstrate that there was a certain lack of coverage in the initiatives that my client was pursuing and thus spark a debate. Enjoy.

Monday, 28 September 2015

Differences between Industrial and Digital businesses

Since I'm stuck on a Eurostar crawling through western France I thought I'd use the downtime to share this table I've made on the differences between Industrial and Digital companies across the main business functions. A strange insight into how my mind works... but hopeful a useful summary!

Thursday, 10 September 2015

No leapfrogging: Africa's digital reality

On Monday I was privileged enough to present a keynote at the SATNAC conference in South Africa, the slides for which can be found here.

The presentation is a little less conceptual than my usual... in that there are significantly fewer pictures of cats off the internet. The thrust of my argument was as follows:

Part 1 - setup

  • We are in the early throes of a shift to a new economic system
  • This means redefinition of the roles of individuals in society, businesses and governments in their lives
  • Conceptually, some commentators believe that this new system will enable African countries to leapfrog over their developed world counterparts because they don't have the infrastructure, business model and cultural encumbrances of the Industrial Economy
  • To examine whether that is true, we need to look at the ingredients for success at a macro (national or perhaps mega-corp level), which I'd describe as:
  • Pervasive access to computing (because this is the general purpose technology of the era)
  • Symmetry of information (to enable the maximum benefit of that technology and empower people)
  • An innovation and entrepreneurial culture (that seeks to monetise as well as create new ideas)
  • Digital skills and education (providing everyone with the capabilities they need to thrive personally and professionally in a new world)
Part 2 - Access (this was a technology conference, after all)
  • Computing power is cloud-based and there's an effectively infinite amount of it available as long as you have connectivity, so there's no need to worry about that
  • Access to computing is the key and this is made up of four elements: device proliferation, efficient organisations to make services suitable for consumers, core network capacity and international connectivity 
  • Consumers in Africa have huge desire for phones, but smartphone penetration is still extremely low
  • $90Bn has been spent on upgrading African telecoms infrastructure over the last 5 years, which is a huge number in absolute terms...
  • ...but when you look at it relative to the rest of the world, you see that only a handful of countries are at the average level of investment in infrastructure per capita
  • Given that most African countries are starting from a position of scarce coverage and depth of communications, this means that despite the investment they are slipping further behind
  • More than $30Bn of M&A has also happened in the last 5 years, but this has no consistent positive or negative impact on investment
  • The final part of the mix, inter-network connectivity is particularly bad - more than half of African countries have no Internet Exchange Point (IXP), making peering between providers prohibitively expensive
  • In short, there is consumer demand for services, although not internet ones, network infrastructure is lagging and interconnectivity is even more lagging
Part 3 - culture
  • Being a digital economy is about way more than just having decent connectivity (something that many legislators fail to appreciate)
  • Culture is at least as important. In my view this is a function of having problems to solve; the ability to take risk; access to resources and appropriate regulation
  • Taking them one-by-one, there are plenty of startups in Africa but they tend to be dealing with local problems caused by lack of infrastructure rather than those with international relevance. MPESA's patchy success outside of Kenya is illustrative
  • Culturally though, Africans seem more than typically willing to take risks and want to set up their own business (the exception being in South Africa, which has disastrously poor incentives for entrepreneurial behaviour)
  • Lack of availability of capital and other production resources is a serious impediment...
  • And the developed market solution of online ways of matching supply and demand are basically unavailable
  • An important thing to know is that success in digital products and services is a numbers game - you can't just have one crowdfunding platform and hope for it to succeed - you likely need to have dozens and let natural selection take its course
  • Finally, the role of government in this needs to be to educate people in the real skills they need, rather than interfering in telecoms!
  1. There is no evidence of a leap frog in progress
  2. Infrastructure may be wireless and broadband-first in a way that it isn't elsewhere, but there's nowhere near enough of it to make any African country a South Korea and the possibility of that scenario emerging is actually receding
  3. For all of the fibre being dug in, there are more basic needs - IXPs being a first thing, a supply of cheaper smartphone handsets a second one
  4. The digital innovation that is taking place in African countries is solving national problems. It is using tools that are not relevant outside Africa (feature phones) to solve problems that are often irrelevant as well. This is not a criticism of that activity: it will certainly help countries over their infrastructure gaps, it just isn't likely to be a source of FDI
  5. Governments need to focus on getting the skills basics right in their countries. This may be a way of starting an actual leap forward as the skills of the new economy are not widely available in the developed markets so making them basic in African countries could gain advantage over the long term
I'm aware that this might be a somewhat controversial point of view. However much I wanted to be able to make a positive case, I'm afraid that the future currently looks like slipping further behind in relative terms and becoming a less attractive place to invest. One of those times when I hope I'm wrong.

Monday, 7 September 2015

Africa Telecoms Investment update

I had the chance to return to a topic that was very close to my heart for many years: that of the development of foundations for a digital economy in Africa. I'll drop a transcript of my keynote at SATNAC here in the next day or so, but for now, here's two high level figures on the investment over the last 5 years. 

I'm planning to restart blogs on this topic (and in general) once I've completed my latest book, on the traits of a digital business, later in the year.

In the interim, here's two figures: total investment in telecoms infrastructure, including international, core, MAN and access for all African countries, split by region. My summary of the figures is that although investment has been huge in African countries, on a per capita basis very few countries are even on par with the global average investment. Given where they're coming from, this means that African countries are effectively falling behind in terms of the foundational infrastructure that powers a digital economy.