Amdocs has shed a bit more light on the drivers behind its proposed $224 million acquisition of Vubiquity and how the key distributor of premium content fits into Amdocs’s focus on hundreds of communications companies around the world.

Amdocs to Acquire Vubiquity for $224M

A big one is to enable Amdocs to diversify its business and “further expand our capabilities in the world of media and entertainment, which is increasingly converging,” Eli Gelman, Amdoc’s president and CEO, noted Tuesday (Jan. 30) during the company’s earnings call.

“We’re seeing increasing convergence between traditional wireless and pay TV distributors, content owners and large OTT virtual players,” Gelman said. “By acquiring Vubiquity, we believe Amdocs will be uniquely positioned to address the requirements of distributors, content owners and Web players as the lines between each become increasingly blurred.”

By way of example, he cited AT&T’s acquisition of DirecTV and its pending acquisition of Time Warner Inc., as well as Comcast’s acquisition of NBCUniversal in 2011 and Comcast’s more recent pursuit of mobile services. Meanwhile, content players, including Disney and HBO, have developed or are developing direct-to-consumer business models.

“We saw this a very natural and complementary fit that works with how the media and entertainment industry has been evolving,” Darcy Antonellis, the CEO of Vubiquity who will head up the Amdocs media division after the deal closes, said in an interview. (Antonelis is a member of MCN's 2018 Wonder Women class.)

She said Vubiquity, for example, can help Amdocs work through the complexities of the content licensing and rights acquisition process and complement Amdocs's expertise in areas such as subscriber management.

In Vubiquity, a company with about 500 employees, Amdocs will get access to a unit with relationships with more than 600 content owners (via a mix of major networks, studios, digital-first networks and independent content owners) that delivers content to 121 countries in 80 languages.

As Amdocs looked to diversify and reach into verticals that extend beyond its communications core, “We wanted to step in with a strong presence and a strong pedigree and knowhow [with] existing relationships embedded in the ecosystem, and Vubiquity gives us that,” Gary Miles, general manager for Amdocs, said in an interview.

He also pointed out that Amdocs started to broaden its reach into the media industry last year when the company acquired Vindicia, a company that makes a cloud-based subscription billing platform for digital media and OTT content offerings.

“This [acquisition of Vubiquity] is part of a broader, strategic, thought-out approach,” Miles said.

The vast majority of consumers (90%) are interested in upgrading from a basic subscription to one that includes valuable privileges, including discounts, exclusives and access to events or activities that involve other subscribers, subscription billing specialist Vindicia found in a new study, Consumer Demand for Value-added Subscription Services.

The survey, based on data from 1,000 U.S. adults who have at least one paid subscription, also found that 76% of the group would be willing to pay $3.99 more per month for a subscription that gives them access to premium content or other members-only benefits. That rises to 84% if  that price is set at an extra $1.99 per month.

Among consumers surveyed who have multiple subscriptions, those that that deliver over-the-top video/video-on-demand services were the most important to them (40%), followed by shopping (32%), then audio (9%) (see chart).

OTT/VOD was also the most frequently used subscription service (42%), followed by shopping (28%), audio (13%), and print media (5%).

Broken down further, 45% said OTT services such as HBO Now, Netflix and Hulu were the most important to them, while 30% cited shopping services such as Amazon Prime and Google Express, and just 8% identified audio services such as Apple Music, Pandora, Spotify and Audible.

Regarding engagement, Vindicia found that 30% of consumers used their most-utilized subscription service at least 20 hours per week, while 28% used them between 11 hours to 20 hours per week, and 42% used them between 1 hour to 10 hours per week.

Vindicia’s study also shed some light on why some consumers opt to cancel their subscriptions. Of those who recently canceled, 39% said it was because they didn’t see the value in the subscription, 36% said they no longer wanted the financial obligation, 34% said the subscription was no longer relevant to them, and 13% cited billing issues, such as difficulties updating credit card info or confirming payment details.