Despite the Telstra TV launch and Optus' English Premier League (EPL) rights victory, Ovum claims that pay TV will keep growing, and telecommunications carriers will never be the major providers of media content.
"There are a lot of ambitions stated about telcos becoming content companies," David Kennedy, Ovum research director for APAC Telecoms, said at the Australian OTT Summit in Sydney on Wednesday.
"I think all of the telcos will be picking their partners, in order to bundle their telco services. They need to, because they need to defend their real revenue source, which is broadband access.
"But I just don't believe that the telcos as such are ever going to become major or dominant players in the media industry."
Kennedy's statements fly in the face of recent efforts by telcos to move into content provision, most notably by Optus acquiring the exclusive rights to broadcast the EPL, snatching the most-watched football league in the world away from pay TV provider Foxtel.
Fetch TV CEO Scott Lorson argued that high-value content such as the EPL could in fact result in a customer base exodus from pay TV to telcos.
"I think that there are certain properties like the EPL that have the potential to actually shift consumers. It's one of those properties where people will move their broadband or move their telephone," Lorson said at the OTT Summit.
"One thing that people need to now appreciate is we're moving from channel economics -- where it's how much advertising can we sell if we buy that sports right, or how many people will subscribe to this particular channel. We're now moving to platform economics, which is a world where a telco can say it's worth $3,000 to $5,000 of lifetime value for me to get a new broadband subscriber or a new mobile subscriber.
"If you look at that kind of value that's being created, and you go out and get a premium sport, let's say you pay $100 million ... it doesn't take many people to move across until you've paid for that.
"So I do think you're going to see the telcos as the logical owners of premium sports rights that aren't covered on free-to-air."
Ovum on Wednesday published a report suggesting that Optus would likely bundle EPL broadcast access with its telco services in order to gain new customers.
"Lacking a broadcast network, Optus will mostly monetise EPL games by bundling them with Optus telecommunications services," Ovum said.
Ovum also said that Optus reportedly paid double the cost of the previous EPL-Foxtel contract -- but the analyst still forecast pay TV subscriptions to grow by 18.4 percent until 2019.
Optus CEO Allen Lew, who told ZDNet in April that he is an avid viewer of the EPL, argued that customers would prefer to pay for direct sports subscriptions, rather than signing up for pay TV.
"I think you've seen us starting to move away from being very mobile focused to one that is about integrating communications and entertainment for customers, regardless of where they are," Lew said.
"I think that is going to disrupt the pay TV model."
Optus' main rival, incumbent telco Telstra, has also been making moves into the media industry by launching its video-streaming device Telstra TV to provide home broadband customers with access to streaming services Netflix, Presto, and Stan; as well as catch-up services SBS on Demand, Plus7, and 9Jumpin.
"The next wave of media ecosystem disruption is coming from telcos and media companies coming together," Joe Pollard, chief marketing officer and group executive of Media at Telstra, said last month.
According to Eric Kearley, director of IPTV and Pay TV at Telstra, the company launched the streaming device because there was a gap in the market.
"Telstra TV we launched because there was a need for our customers for something like it, to drive data usage for us and to choose Telstra as their broadband provider in increasing numbers."
Kearley disagreed that Telstra has been outplayed in the media sector by Optus' EPL success, saying that Telstra's 50 percent ownership of Foxtel places it as the main competitor.
"Telstra's position is very, very different from a lot of other telcos who invest directly in content," he said.
"The half ownership in Foxtel changes a lot of that. So we're already half owners in the company that has by far, in terms of subscription rights, the most attractive sports rights already. So I think we made a lot of the investments and invested more than Optus have by virtue of that investment already. So I don't think we're behind Optus; I think we're ahead."
Kearley could not say whether Telstra had also bid on the EPL rights.
According to Kearley, consumers want their content to be delivered by the telco they've signed on with -- effectively cutting out the middleman.
"I think the whole merger between the media and telecommunications is consumer driven. So I think if you start with the consumer ... the provisioning and networks and data that gives you the entertainment and the entertainment -- it is obvious that consumers want that from the same source. So telcos have to provide the entertainment."
When asked whether Telstra would ever invest in media of its own, Kearley said "they might".
National Broadband Network (NBN) chair Ziggy Switkowski agreed that the rate at which telcos are transitioning into the media industry will only increase, as they will have to bundle broadband with content offerings in order to gain and retain customers.
"This train is only going to gather speed. We've seen the recent move by Optus to acquire the EPL soccer rights, and we're likely to see an increasing number of these kinds of deals in the future as the arrival of OTT and the national availability of high-speed broadband creates far more competition in the subscription and broadcast TV market," Switkowski said, speaking at Monday's CommsDay NBN Forum.
"With broadband becoming an ever more important delivery platform -- with Optus' recent capture of the EPL rights a good example of this -- then there is clearly the potential for issues to emerge as competing interests clash," Switkowski added at the OTT Summit on Wednesday,
Lorson said that if telcos want to succeed at offering broadband alongside content, they will have to be more liberal in their data packages.
"How are people going to consume all this rich content ... if you can't take it with you? I think the telcos are going to have to continue to be very aggressive, and it's going to be a key swing vote if they're able to provide more generous data allowances across fixed and mobile."