Orange might have taken off its publisher hat, but it remains interested in content

Last year, Orange said that it was giving up on content publishing to focus on content aggregation and distribution instead. Essentially, it pulled the plug on the expensive venture it embarked upon a few years ago to create its own exclusive sports and movie TV channels. As CEO Stephane Richard put it when unveiling the carrier group’s five-year plan in July, Orange does not think of itself as a media group.

But one could be forgiven for thinking otherwise this week, after Orange’s announcement that it will buy a 49% stake in the world’s second-largest online video site, Dailymotion, with the option of eventually taking full ownership if it sees fit. Orange sees no contradiction in that, however. In a press release, it states that the acquisition “fully illustrates” Orange’s new content strategy.

Yes, it is buying a content company, but no, it is not buying the rights to content exclusively for itself and its customers, the carrier says. It will provide just another distribution channel for Dailymotion’s huge catalog of video content. The French site, which draws 80% of its audience from outside France, aggregates content from amateurs, independent content creators and “premium partners” in the media and entertainment industries – much in the same way as its larger rival, YouTube.

What it sees in Dailymotion
Orange obviously sees a prosperous future for Dailymotion and, rather than just teaming up with the company, wants to share in its prosperity. It also wants to lay its hands on Dailymotion’s video-delivery technology. Like all cellcos, Orange is experiencing huge growth in video traffic over its networks. It sees video on a par with social networking, at the top of the digital-content tree.

The carrier told it Informa that it has met customer demand on IPTV services by managing network traffic to guarantee quality of service. But video usage is skyrocketing on new connected devices, primarily via over-the-top players such as YouTube, AppleTV and Xbox360, it added.

Dailymotion has developed a platform to optimize video delivery across different kinds of connected devices, and Orange wants to use that technology for its multiscreen strategy, to help it deliver video across Internet, Wi-Fi and 3G networks. Dailymotion’s platform handles 1 billion video views and 93 million unique visitors a month.

The carrier also intends to incorporate Dailymotion’s content into its own offering, while at the same time prioritizing traffic over its networks to guarantee certain levels of service quality for the video-streaming service. It told Informa that it will offer the Dailymotion service via its Web and mobile portals, bundled with dedicated access offers. It also plans to bring Dailymotion to TV screens via its IPTV service and to mobile screens through the development of offline and convergent playlists.

Orange cites numerous benefits it believes Dailymotion will gain from its union with the carrier: Access to Orange’s global customer base and distribution network, including physical stores and call centers; the opportunity to enrich its content catalog (largely comprised of short ad-funded video clips) with Orange’s premium catalog; access to Orange’s pan-European advertising network; the opportunity to be embedded in Orange’s signature devices, including e-books, netbooks, mobiles and tablets; and access to Orange’s content-search, recommendation and indexing technologies across different screens, including PC, TV, mobile and tablet.

Past content ambitions
Prior to its change of tack last year, Orange spent a lot of money developing its own content, primarily in France, the home of parent France Telecom. In 2008 it launched a sports TV channel that had exclusive rights to show French premier-league soccer games and numerous other sporting events. It also launched five channels – dubbed Cinema Series – providing access to movies and TV shows, and a vast video-on-demand catalog, also through exclusive rights. These channels were fully owned and run by Orange and were offered exclusively to Orange subscribers. All in all, Orange was spending about €400 million (US$549 million) a year on content rights.

Take-up of the channels was insufficient to cover the huge content-licensing costs. Put simply, not enough Orange customers subscribed – hence the carrier’s change of strategy.

Orange recently signed a deal with French broadcaster Canal Plus to create a joint venture merging Orange’s Cinema Series channels with Canal Plus’ TPS pay TV channel. Negotiations are ongoing with potential partners for the Orange sports channel, an Orange spokeswoman told Informa.

Beyond the Dailymotion acquisition, other examples of Orange taking an aggregator role include its launch in 2008 of e-newspaper service Read&Go, in partnership with five French newspapers, and its partnership with music-streaming service Deezer.

Orange has offered to pay €58.8 million for a 49% stake in Dailymotion. A deal is expected to be sealed in the coming months but is subject to consultation with trade unions.

One thing is for sure: Orange has not lost interest in content. It has just scaled down its ambitions a tad.