by Tien Tzuo
Here’s an interesting article on Vivendi that I read this weekend, from the Wall Street Journal. WSJ.com is a paid subscription site, so you may have to be a member to see the article, but the gist of the article is that Vivendi is outpacing its rivals, even during the global economic crisis, in large part due to its investment in building out a subcription business. Here’s a quote:
After the tech bubble burst in 2000, Vivendi nearly toppled over. During this crisis, the French entertainment and telecommunications hybrid is outperforming its media rivals.The reason: Around 70% of Vivendi’s revenue comes from subscriptions to its broadband, television, mobile-phone, online-game and other services, and relatively little from volatile advertising. Vivendi is bravely sticking to its earnings outlook for the full year. Bertelsmann, News Corp. (owner of the Wall Street Journal), Time Warner and TFI — the main rival to Vivendi’s Canal Plus television unit in France — have all lowered forecasts.
Here’s another proof point as to why the predictable nature of subscription services makes for a superior business model.