US challenger MNO Sprint has belatedly jumped on the content bandwagon by acquiring a third of music streaming service Tidal for a reported $200 million.
The apparent consensus in the US is that operators need to become content owners too if they want to prop up their drooping ARPUs. Verizon has already snapped up AOL and, for some reason, seems determined to get Yahoo too. AT&T, meanwhile, will absorb Time Warner if Donald Trump gives it half a chance.
Tidal is a music streaming service launched by Norwegian company Aspiro in late 2015 and was soon acquired by the rapper Jay Z, who relaunched it as the music streaming service owned by the artists, which included a lot of prominent American R&B performers but also some from other genres. It received initial criticism due to its price and artist exclusivity.
Sprint seems to see these as virtues, however, and is reportedly betting $200 million that having unlimited access to all this exclusive R&B goodness will help it hold onto its existing subscribers and also grab a few new ones. This still only gets it a third of the company, however, but Sprint CEO Marcelo Claure gets to join the Tidal board and hang out with all those stars.
“Jay saw not only a business need, but a cultural one, and put his heart and grit into building Tidal into a world-class music streaming platform that is unrivaled in quality and content,” gushed Claure. “The passion and dedication that these artist-owners bring to fans will enable Sprint to offer new and existing customers access to exclusive content and entertainment experiences in a way no other service can.”
“Sprint shares our view of revolutionizing the creative industry to allow artists to connect directly with their fans and reach their fullest, shared potential,” obliged Jay Z. “Marcelo understood our goal right away and together we are excited to bring Sprint’s 45 million customers an unmatched entertainment experience.”
As the fourth largest US MNO Sprint was never going to be in the position to make the kind blockbuster bets its larger competitors can, so it seems to be trying to get as much impact as it can for its couple of hundred million. This still seems like a fair bit for a third of a company that cost Jay Z just $56 million two years ago, but if Sprint’s KPIs start moving in the right direction as a result of the move it may still be viewed as a bargain.