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Finding opportunity in disruption

The cable industry has generated impressive growth over the last half decade, building on its traditional strengths of superior technology, an attractive content distribution model and a positive regulatory environment.

Overview

U.S. multiple system operators (MSOs) have generated an average total return to shareholders of 17% percent, while U.S. cable MSOs have performed even better, at 18% percent. According to Accenture research, this strong performance has been driven primarily by top-line revenue growth.

This revenue and value growth has been enabled by three structural advantages:

  1. Superior broadband technology

  2. Economics of the legacy content distribution model

  3. Favorable regulatory status quo

Yet, there are several storm clouds appearing on the horizon: Average Revenue per User (ARPU) is declining with increased competition from new entrants including telcos and OTT (over-the-top) players; content creators are increasingly looking to bypass “middle men” distributors; and technology is rapidly changing, with super-platform players increasingly moving across industry verticals.

Complacency can be an enemy of high performance, especially given the rapid changes in the $2 trillion communications, media and technology industries. Cable MSOs have an opportunity to seize the value-growth opportunities that these potential disruptors are creating.

For a copy of the full report please contact alison.edwards@accenture.com

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Background

Accenture analysis of current trends and the competitive marketplace has identified four major industry and market disruptors, as well as five key opportunities for multiple system operators (MSOs) to turn disruption into competitive advantage. This report builds on industry points of view recently released by the Accenture Communications practice and is the first in a new global thought leadership series. Accenture’s approach looks at sector strategies, industry trends, new technologies and investor expectations to assess where Accenture believes value will be created in the future within the $230 billion multi-system operator industry.

Key Findings
Through research, in-depth discussions with our clients, and Accenture’s broad experience with multiple system operators (MSOs) and their competitors worldwide, we have identified four potential disruptors that MSOs need to prepare for in order to continue to grow their value. Each disruptor also provides an opportunity for MSOs to respond in innovative and value-generating ways.

  • Disruptor 1: Explosion of mobile data, devices and usage ($25-50 Billion potential impact on value)

  • Disruptor 2: Disintermediation and value chain migration ($15-25 Billion potential impact on value)

  • Disruptor 3: Integrated digital super platforms ($30-40 Billion potential impact on value)

  • Disruptor 4: Digital operating models for delivering customer service ($16-32 Billion potential impact on value)

Recommendations

Accenture believes that in order to seize new value growth opportunities amid the threat of disruption, cable multiple system operators (MSOs) should focus on five key opportunities:

  • Opportunity 1: Increase the pace of next-generation products and services

  • Opportunity 2: Reinvent the operator role in the distribution channel

  • Opportunity 3: Transform the customer value proposition

  • Opportunity 4: Improve the ability to attract top talent

  • Opportunity 5: Extend the marketplace footprint

The communications and entertainment marketplace is changing rapidly, but by embracing innovation and key operational changes, the cable industry will be poised for yet another era of value growth.