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Media Pacts Pay Off For Globe

Paid video is moving center stage for Globe, the Philippine mobile operator which has penned distribution tie-ups with Disney, Singtel-backed Hooq, the NBA League Pass and, most recently, Astro’s Tribe.

These non-exclusive deals, reflecting Globe’s ongoing repositioning as a lifestyle company, follow media partnerships with Facebook in 2013 and Spotify in 2014, both instrumental in driving data consumption among mobile subscribers.

Now it’s video’s turn to do the same for high-speed broadband.

“The market, by way of demographics, is ready,” said Globe’s president and CEO, Ernest Cu. “The mobile networks are ready, with very prevalent 4G networks,” Cu added, speaking in Bali at this year’s APOS conference.

“But, much like the way we convinced people to move away from torrenting into legal music via Spotify, we have to change habits," he continued. "That's why there's so much investment being put by Globe in helping people make that shift.”

Globe’s next promotional salvo for mobile internet will take the form of digital lifestyle stores, that can also help market Globe’s media partners. The first branch, patterned after Apple’s retail outlets, is due to open in Manila within the year.

“Once we've put smartphones in people's hands, we're now going to teach them what to do with it,” Cu said. “What online video is about, what music is about, what connectivity is about in combination with the phones that they have.”

Upfront investment

Globe, which ended 2015 with 52.9 million mobile subs, now claims a 71% market share of mobile data revenues thanks to these initiatives.

This monetizable base owes itself largely to an eight-year push to increase smartphone penetration, which began with Globe bundling iPhones with its plans in 2008. Later on, Android models and entry-level local brands, such as Cherry Mobile, were also included.

By the end of last year, smartphone users accounted for about 40% of Globe’s mobile subscriber base.

“We anticipated that the public was going to shift from feature phones to smartphones,” Cu recalled.

“The first thing we did was build a network out completely. We put in about a billion dollars into the business, putting 3G everywhere and eventually adding on a layer of 4G LTE. We revised our product offering and we put a lot of smartphones into people’s hands.”

Globe’s six-month Free Facebook promo in 2013, meanwhile, cost the telco another US$25 million per month in lost revenue. Nonetheless, mobile data usage tripled as a result.

Globe followed up by introducing Spotify to the Philippines, via a similar free access plan to data subscribers. Since then, a monthly subscription to Spotify’s premium tier has settled at roughly US$3 per month in the Philippines, perhaps the cheapest in the world.

The pricing helped create a workable alternative to piracy. “Filipinos have already ingrained in their mind that music is free because it's all over the internet,” Cu said.

“There's no value in the music itself per se, but the value was in the fact that there were so many features in Spotify, like the curated playlist, the on-demand feature, downloadability of the music, as well as the discovery aspect.”

Persuading Filipinos to take on paid services remains a tough sell in a country where piracy is rife. Partnerships between content providers and distribution platforms allow both parties to leverage the other’s expertize.

“There's no way for us to build a better app than Hooq, or what our other partners may have, because that's not our competence,” Cu explained.

“Our competence is distribution, reach, marketing, caring for that consumer and, most importantly, billing that consumer.”

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