Page 11 - 2012 Annual Report

VIVENDI l 2012 l Annual Report 11
GROUP PROFILE – BUSINESSES – LITIGATION – RISK FACTORS 1
1
SECTION 1 - GROUP PROFILE
STRATEGY
UNIVERSAL MUSIC GROUP
Universal Music Group is the world’s largest music company. In 2012,
with the acquisition of EMI’s Recorded Music, UMG strengthened its
operations substantially, particularly in Germany and Japan, two of the
world’s largest markets with high standards of living and low piracy. The
new conglomerate’s global market share exceeds 30%.
After a decade of declining growth in the music market, UMG is ideally
placed to benefit from a rebound in the sector, which is being driven by
the diversification of distribution methods and fiercer competition among
distribution platforms. It has a large portfolio of talent and artists, unique
experience in the transition to digital, and opportunities to enter new
markets, especially through digital.
ACTIVISION BLIZZARD
Activision Blizzard is the world’s number one video games company and
the most profitable in the sector. The game Call of Duty: Black Ops II ,
launched in 2012, has been a huge success. It set a new sales record
by crossing the one-billion-dollar threshold in just 15 days, beating the box
office record set by the feature film Avatar .
Total sales of the Call of Duty franchise have exceeded the global revenues
of Harry Potter and Star Wars, the two most profitable film franchises
of all time. Sales of the Skylanders franchise have also beaten records,
generating more than $1 billion in the last 15 months.
Activision Blizzard is ideally positioned to expand, due to its strong
franchises ( Call of Duty, World of Warcraft, Skylanders and Diablo )
and unparalleled expertise in digital content creation and distribution.
It also has major growth potential in Asia, where it is the only Western
entertainment company to operate successfully (in China with World
of Warcraft and in South-Korea with StarCraft).
On the whole, Vivendi brings together unique know-how, from content
creation to content distribution. Canal+ Group, UMG and Activision
Blizzard have unrivalled experience in managing the analog-to-digital
transition. Unlike “traditional” content and media groups, Vivendi’s
operations are already at the cutting edge of digital.
1.3.3. Repositioning Vivendi’s Telecoms Activities and Exploring Consolidation Opportunities
Telecoms networks around the world are assisting with the explosion
of data traffic and the faster broadband required for new digital uses
(multiple screens, the boom in content consumption on tablet computers).
Operators are supporting this digital revolution by investing heavily in
transitioning mobile phone networks over to 4G and developing fiber
optics to replace copper.
SFR
In January 2012, the French telecoms market was radically altered by the
arrival of a fourth mobile operator, which led to a sharp drop in prices. This
transformation of the competitive landscape, combined with regulatory
pressure (particularly VAT and interconnection rates), came at a critical
time when technological transitions were calling for major investment in
mobile and fixed-line broadband.
Against this difficult backdrop, SFR launched an action plan to make its
operations more profitable including:
✱ investment in the roll-out of its 4G network to protect its significant
market share in high-end segments. In fixed-line telephony, SFR is
also investing in fiber optics (FTTH) to take advantage of the expected
boom in broadband;
✱ simplified rates, the introduction of differentiating offers in
October and the repositioning of some offers to compete in the low-
end segment (price of the Red package cut by 50% in December); and
✱ adaptation of cost structure to maintain profitability and preserve
investment capability: SFR launched a €500-million cost-reduction
plan which is expected to take full effect by the end of 2014.
In addition to these organic streamlining measures, Vivendi is studying
other industrial scenarios that have the potential to create value.
MAROC TELECOM
In Morocco, Maroc Telecom is continuing to develop its customer usage
rates with respect to its services, against a climate of economic slowdown
and increasing competition. Combined with cost-control measures, this
strategy has enabled the company to remain highly profitable.
In an intensely competitive environment, Maroc Telecom’s African
subsidiaries are recording significant increases in revenues and
profitability due to very strong growth in the mobile phone segment, more
varied offers and increased customer usage rates.
To create value and limit the decline in the Average Revenue Per User
(ARPU), Maroc Telecom is developing increasingly innovative data
offerings aimed at the general public and businesses. To maintain its
competitive lead, it continues to invest heavily in network capacity,
particularly 3G in the mobile segment, and to improve its customer service,
with a more extensive distribution network and upgraded customer
management tools. Concomitantly, it is continuing to seek further growth
through acquisitions in Africa.