For more than two decades, it has been a material challenge for Telecom and Media companies to solve the riddle on how to capitalize on content provisioning and distribution through virtual channels. In the early 1980’s, existing content, products, and services did not translate well into the channels of a digital distribution network. Once content was translated into a form that fitted the technical requirements and limitations of the network, the service offering, usability, and discovery were deemed substandard when compared to existing channels; resulting in a slow uptake rate in markets - the bet on technology alone instead of an integrated alignment with markets and content led to the perception of a lack of compelling online content on overbuilt networks.

"High-Tech" was the telecom word of the 1990’s, and the initial miscalculation was marketed as an opportunity. The idea of a global network resonated well with the trend of globalization. The raise of a completely new economy and untapped markets with many blue oceans quickly created a fertile financial breeding ground. Technological progress seemed to be the driver for most of the investments, began feeding on itself, and produced the well known "Bubble" with associated exuberance. The frenzy fed on itself, with ideas "stovepiped" in content, technology, and markets. People became aware of the need for alignment: they cannot feed on single investment pushes, but have to co-exist in a complex ecosystem. As a result of the bust, the Telecom industry saw tough times in the early part of the new millennium. The Telecom bomb alone in the US market resulted in a $2 trillion dollar loss of market cap of the industry’s workforce and more than 600 Telcos filing for bankruptcy. Nevertheless, the bubble also left a handful of telecoms with both powerful enablers and abundant bandwidth. As a result of major consolidation and restructuring efforts, the industry seems to be back on track: in 2006, the US Telco industry posted record profits of $72 billion US Dollars and a moderate growth in revenues. If one takes a closer look at the improved numbers, the root cause is not incremental growth but synergy effects based on increased operational efficiency as a result of the market consolidation.



Although the industry seems to be healthier than ever, the riddle that remains unsolved concerns incremental sources of revenues. In spite of better numbers the sheer business foundation of telecoms operators remains fundamentally challenged as their traditional revenue sources are increasingly commoditized. One of the biggest opportunities and bets at the same time could be the successful participation in the market opportunity Digital Entertainment.
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