Telecommunications companies have several promising avenues for future growth—from digital gaming and online video to eHealth and financial services—but they will continue to face intense pressure from large tech hyperscalers.
That is the conclusion of analyst firm Omdia in its latest report, which argues that while many telcos have already invested in TV and online video entertainment, other markets are worth exploring. However, directly competing with hyperscalers is largely unrealistic. The report, Quantifying the Consumer Telco Opportunity 2023, is designed to help service providers shape digital service roadmaps for the coming years.
Traditional telco offerings—such as mobile data, pay TV, and broadband—remain the core revenue streams for operators. At the same time, Omdia highlights fast-growing non-traditional categories, including messaging apps, smart home solutions, and digital music, that together are projected to reach $513 billion by 2027. Among these, digital gaming and online video represent the largest opportunities.
Yet the dominant presence of Google, Amazon, Meta and Apple casts a long shadow. Much like the cloud wars of the last decade, trying to outspend or outcompete the biggest tech players is unlikely to be a successful strategy for most telcos.
As a result, partnerships become essential. Omdia’s benchmark on digital consumer operator strategy finds that the more service providers invest in a market area—especially via partnerships—the larger their potential impact on market share and revenue. Collaborating with established tech firms can help telcos extend their reach and strengthen their service offerings.
“In many areas, telcos will need to accept that competing head-on [with hyperscalers] is unrealistic and developing partnerships with such players is not only more pragmatic but will also serve to strengthen their own products and brands,” said Jonathan Doran, principal analyst for digital consumer operator strategy at Omdia.
Doran added, “Service providers must look beyond data and diversify into adjacent digital markets to support continued growth of their consumer businesses. Choosing the right go-to-market approach and business model for each service area is critical to balancing market opportunity with financial risk.”
Photo by GR Stocks on Unsplash
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