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Latest Reports

Venture Insights reports inform and enable better decision making through independent, objective, and high quality insights, analysis and thought leadership across the media, digital and teleco industries in Australia and New Zealand and with global insight from our European partner, Enders.

  • New
    November 14, 2019

    Webscale Playbook: Baidu

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    Baidu, often referred to as “China’s Google”, is embarking on a new journey to pursue growth outside its core search and advertising business. That’s vital as the online advertising business is maturing, yet Baidu continues to rely heavily on it (80% of 2017 revenues).
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  • New
    November 13, 2019

    NEXTDC FY19 update: growing fast with the market

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    On 30th October 2019, NEXTDC had its 9th Annual General Meeting. The Australian DC market remains competitive and given the demand most of the DC providers are expected to grow fast. NEXTDC is counting on high growth rate of demand for hyperscale data centres and is clear about its trajectory
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  • New
    Magazine stand
    Magazine stand
    November 12, 2019

    UK’s TI Media goes back to the Future

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    Specialist publisher Future has offered £140m for generalist TI Media’s 41 brands, which will give Future 220 global brands upon expected completion in Spring 2020. The acquisition, which includes wholesaler Marketforce, is contingent upon shareholder and CMA approval. Future is the darling of publisher stocks, pursuing an energetic growth and scale strategy, and diversifying revenues through digital and experience innovation. How Future’s culture of experimentation and optimisation will work with TI Media’s more general portfolio is an open question. Only time will tell if the overall portfolio balance will work.
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  • New
    November 11, 2019

    UK’s BT: Bumps on the road to recovery

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    BT suffered a weak Q2 with revenue and (particularly) EBITDA declines accelerating, but this was mainly down to timing (particularly at Openreach, which will likely recover in Q3), with the company confident in maintaining full year expectations. BT’s fixed broadband business enjoyed some recovery as the pricing environment improves, but will suffer another price timing bump next quarter, and its mobile business is suffering from a tough market environment that is unlikely to improve in the short term. The company is busy re-branding, re-positioning and transforming, but the outlook for football rights costs and fibre roll-out regulation will dominate in the short term, and further bumps (such as the Virgin MVNO contract loss) may emerge.
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  • November 8, 2019

    Streaming wars and the future of Foxtel

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    Up until a few years ago, Foxtel has enjoyed an uninterrupted run as the monopoly premium Pay TV provider in Australia. But the arrival of international SVOD players and the rise of local challengers has made a dent in Foxtel’s business.We believe the challenges that Foxtel faces are structural in nature and Foxtel could find it tough to recover lost ground.
  • November 6, 2019

    Champions League rights auction: BT’s cost-cutting opportunity

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    Champions League UK TV rights, at £394m/season, appear to have reached a ceiling, with costs on a per match basis now comparable to the more-desirable Premier League. In the imminent auction, current rightsholder BT is the clear frontrunner. Potential competitors appear reluctant: Sky Sports has thrived since losing the rights in 2015, and no other players can reasonably compete at this spend. This presents BT with a golden opportunity to rein in costs, with a view to moving BT Sport towards breakeven at an important time for the wider business, considering the financial pressure it is facing

  • November 4, 2019

    Peak football revenues and post-boom scenarios

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    Broadcast licensing revenues for football are likely to be ex-growth in the top five markets in Europe, with some limited upside from sponsorship and out-of-Europe rights. The broadcast revenue boom stoked the rise of super clubs with global fan bases, feeding player transfer valuations, and a potential downturn of the latter could magnify the impact of the revenue decline. The leagues in Italy, France and Spain are more exposed to the risks of broadcast licensing revenue decline, while the Premier League’s model looks robust

  • October 31, 2019

    Australian MVNO Market Overview

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    On 29th October 2019, Venture Insights presented their views on the Australian MVNO market at Telstra Wholesale’s Business Connect conference in Sydney.Global MVNO market size is expected to nearly double between 2018 to 2025, growing at CAGR of about 8%.The Australian MVNO market has grown from 1.5m subscribers in 2010 to 3.2m subscribers in 2018. MVNO subscribers have grown at a CAGR of 10% (2011-18) compared with MNO handset subscribers which have grown at a CAGR of 0.9%. However, MVNOs have over 20% in metro areas – demonstrating continued market focus on pricing. In addition, our survey results showed strong future demand for MVNOs. ~40% of metro respondents who were considering shifting, indicating they would select a MVNO. As such, we expect MVNO subscriber market share to continue to rise especially in metro areas. With a focus on niche segments or linkages to strong brands, the test of most MVNOs is (i) how well they know their target customers, (ii) what other services could be bundled and (iii) are there new market segments to target.
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  • October 30, 2019

    Webscale Playbook: Alphabet

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    Alphabet is out to prove that it is more than just an advertising business. That’s important as the company remains heavily exposed to ads, which accounted for about 86% of 2017 revenues. Yet, Alphabet is facing new competition in ads from Amazon, plus ongoing regulatory scrutiny in Europe. Fortunately the company is generating incredible amounts of cash each quarter, and now has just under $102B in cash & stocks on hand. That has allowed the company to invest heavily in its network, with capex amounting to a telco-like 17.2% of revenues over the last four quarters. Alphabet also spends another ~15% of revenues on R&D. The goal of these investments is help the company enter (or create) new markets, with less ad-dependent business models. Alphabet’s vast network infra supports the company’s cloud computing and device portfolio, as well as AI-based projects in transportation (Waymo), logistics (Project Wing), and healthcare (Verily). As a result, Alphabet’s network, IT & software capex has soared, to $8.2B over the 4Q17-3Q18 period (from $4.1B the year prior).
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  • October 28, 2019

    UK SVOD subscriber trends: who is buying and how many subs

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    With a raft of new streaming services about to hit, there remains a question as to the appetite for multiple subscriptions. Pay-TV subscribers continue to be more likely to take SVOD services—especially when they are distributed on their set-top boxes—however the average number of services per household is well below one. Greater variety and quality of services will likely increase the average number of subscriptions but given the siloing nature of these services, Netflix’s incumbency, library and distribution are its strength; new entrants will battle for a supplementary role
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  • October 24, 2019

    Webscale Playbook: Alibaba

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    Alibaba, once viewed as China’s answer to Amazon, has grown into a giant since its inception in 1999. Though still just about a fifth of Amazon’s size (by revenues), Alibaba has grown rapidly and outshines Amazon in some areas. Its scale in e-commerce is impressive: (i) Alibaba ships 12 million packages a day, 4x of Amazon; and, (ii) Alibaba’s “Singles Day” has become the world’s biggest shopping event. Alibaba has invested heavily in network infrastructure to support its businesses, not just e-commerce but also cloud computing, audio/video streaming, and devices. As a result, Alibaba’s network-related demand has soared in the recent times. It now accounts for over 5% of global webscale network/IT capex, from about 1% in 2012. Alibaba’s network spend share will continue to grow, but will be reshaped by the ongoing US-China trade war.
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  • October 23, 2019

    UK Telecoms sector returns: Money’s too tight to mention

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    Mobile sector returns are low, particularly for smaller-scale operators, with H3G earning less than its cost of capital. Regulatory initiatives, spectrum auctions and 5G look set to worsen this picture as H3G strives to gain viable scale. Back-book pricing is crucial to the returns of fixed challengers. Regulatory intervention is likely to lead to a waterbed effect in the fixed sector and exacerbate challenges in mobile. New entrant business case in full fibre is limited to de facto monopoly opportunities. There is the potential for BT’s returns to increase markedly if it gets full fibre right but new entrants’ inferior economics are unlikely to offer sufficient investor appeal
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  • October 22, 2019

    Programmatic OOH: Coming soon to a billboard near you?

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    Programmatic advertising in OOH is still a new concept in Australia and the groundwork in terms of digitisation and audience measurement is still being laid. While, many OOH players have introduced their version of programmatic advertising, the risk of having a fragmented market with multiple proprietary systems means that programmatic OOH may fail to take off. Outdoor, or out-of-home, advertising is distinct from other forms of advertising. It is highly visible, often very large, and placed in heavily trafficked areas in order to attract as many viewers as possible. Moreover, unlike television, radio, print, internet, and mail advertising, outdoor advertising cannot be turned off, put away or easily avoided. Traditionally OOH was mostly a real estate or location play but with digitisation, it’s now becoming increasingly focused on audience targeting and improving engagement. Industry players are looking to bring additional functionality, formatting and effectiveness to advertisers beyond just digitising existing sites, along with investing in improving measurement technology to help build further advertiser confidence in out-of-home. In particular, programmatic advertising which has transformed the online advertising space could play an important role in the growth of the OOH market going forward. In this report, we explore what programmatic advertising is and the impact it could have on the OOH market. We also look at the key challenges that OOH players face and the risk of Google, a global leader in programmatic advertising, making an entry into the OOH market.
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  • October 17, 2019

    Global & Australian gaming market trends – mobile, cloud a [...]

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    Mobile gaming is now the dominant driver in the global gaming market accounting for more revenue than console and PC combined and the majority of all growth. This shift has been enabled by improvements to internet infrastructure, from stronger mobile networks to faster wireline bandwidth to better cloud-based delivery models; however, there hasn’t been a significant amount of direct monetisation by telcos, as they have only dipped their toes, at best, into this new source of demand.
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  • October 16, 2019

    Webscale Playbook: Amazon

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    Amazon has evolved leaps and bounds since its creation. From an online bookstore more than two decades ago, it has become a global internet giant that relies heavily on scale and network infrastructure for its diverse businesses. At present, the company’s businesses beyond e-commerce include physical stores, cloud computing, audio/video streaming, advertising, and devices – all of which have millions of customers/users serviced by a strong network infrastructure. The sheer growth across its businesses in the recent years has primed Amazon as one of the leading operators in the network space. Naturally, to cope up with its ever increasing network-related demand, the company is not just spending massively to shore up its infrastructure through vendor partnerships but could be mulling to build some on its own, especially on the hardware side. Below are a few key highlights from the report: As a percentage of revenues, Amazon spends more on R&D than capex, which is typical of WNOs. The gap between the two spending, however, is somewhat shrinking which goes to show Amazon’s greater efforts in building datacenters and warehouses in the recent years. Amazon also emerged as the top R&D spender among WNOs over the past two years, due to Prime Video. Amazon currently manufactures some of the network components such as routers, chips, network interface cards, and network gears to meet the growing needs of its cloud business (AWS). The internet giant, known for disruption, could foray into the enterprise networking market and sell its own custom-made hardware by 2020, taking the incumbent network vendors head-on. However, Amazon is also creating a host of new opportunities for network vendors, as it looks to disrupt different industries such as automotive (driverless cars) and healthcare (online pharmacy and heart-rate detection device), both requiring a strong network infrastructure to enable data transfers and communication between sensors and components.
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  • October 15, 2019

    Shared Infrastructure Models and O-RAN Vendor Disruption

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    With mobile network operators facing increased network spend and still defining incremental 5G revenue opportunities, Venture Insights believes it is time to look again at network sharing models. In particular we believe a focus on regional RAN sharing and small cells may be targets for either joint venture or neutral host players. Venture estimates that Government (States/Federal) and Industry spend at the end of round 6 of the blackspot program could be as high as $1.2B. Plus there is additional regional connectivity spending from states around Australia. Examples of blackspot funding for regional rail projects highlight the lack of benefits for all end customers from non-shared network projects versus shared. If Governments continue to heavily subsidise regional network coverage then they should consider the customer benefits of active RAN infrastructure sharing and the use of train repeaters to maximise investment outcomes. In addition, since these networks are capable of wireless and fixed wireless solutions, these network models should also consider the role of NBN.
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  • October 14, 2019

    Women’s sport: inching towards the UK media mainstream

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    Media coverage of women’s sport escalated this summer thanks to the 2019 FIFA Women’s World Cup, which ignited national interest. The Lionesses attracted an exceptional peak TV audience of 11.8 million for England’s semi-final match against the USA. Still, coverage of women's sport remains minimal outside of major events: only 4% of printed sports articles reference female athletes. Quality press are leading the way—the launch of Telegraph Women’s Sport being the prime example—but the popular press are yet to follow. Freely-accessible coverage will generate greater interest and audiences for women’s sport, but continuous investment from all media will be needed to fulfil its potential.
  • October 10, 2019

    UK BVOD advertising: on-demand in demand

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    Broadcaster video on demand (BVOD) advertising is in demand with an £89m rise in 2018 spend to £391m, and is predicted to double within the next six years. The rise of on-demand viewing has created a scaled advertising proposition with a strong 16-34 profile – a relief for both broadcasters and advertisers, given the long-term decline in linear TV impacts for younger audiences. Big challenges remain: linear TV ad loads look excessive in on-demand, BVOD CPTs can be off-puttingly high, and measurement is still unresolved. BVOD is a welcome bright spot which faces online video competition head-on, but it won’t be able to turn broadcasters’ fortunes around alone
  • October 8, 2019

    Australian Data Centres and Submarine Cables Report

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    The Australian data centre (DC) market is rapidly expanding, forecast to reach over A$3bn by 2026 with nearly 1,200 MW of capacity. Current revenues are A$1.5bn with 530 MW capacity. Currently, a majority of data stored in outsourced DCs are from enterprise and government clients. However, the market is moving towards the hyperscale segment, due to ongoing shift to cloud-based computing. We predict hyperscale to generate 35% of total DC revenue in 2026, occupying 50% of total supply. The major providers of DC capacity in Australia are a mix of international players and Australian based DC specialists. We predict that relative market shares of these players will converge over time due to relatively small areas of product and service differentiation.Driving the DC market is the submarine cable industry with four new cables planned. Perth and Brisbane are key growth areas, while Sydney will continue to remain the market leader by a large margin. A cable landing station was completed in Sunshine Coast in September 2019.
  • October 4, 2019

    Follow the Money – Australian VC in Tech

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    Venture Capital funding continues to offer potential for growth in Australia, despite reaching new peaks in aggregate capital in 2018. Overseas funds continue to maintain their contribution levels to total funding, while local institutions have also joined the fray. Australian has a thriving startup ecosystem which is driving growth across all parameters such as funds raised, funds deployed, revenue metrices and exits.