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May 20, 2019Disney gets the final piece of Hulu
Flash Report, ReportsDisney announced that it would acquire Comcast’s 33% share of Hulu in a put/call agreement that can be enacted by either party from January 2024, while taking full operational control of the vehicle immediately. Under the agreement Disney will pay Comcast a minimum of $9 billion for its current stake, provided Comcast fulfils agreed capital calls, which going forward would be just over $500 million/year. Disney secured the continued licensing of NBCUniversal content for Hulu, contributing about 30% of Hulu’s library, but Comcast can loosen obligations to Hulu for the launch of its own SVOD service in 2020.
May 3, 2019Disney+ and Hulu: a flexible pitch to consumers
Market Outlook, ReportsDisney now controls third-party content aggregator Hulu, which has 25 million subscribers in the US. Ramped up by Fox content, Hulu’s operating losses are expected to peak in FY2019 at $1.5 billion, with profits by FY2023 or FY2024. Serving only Disney content, Disney+ launches in the US at the low price of $6.99/month this November, and in 2020 in Europe and Asia Pacific in 2021, aiming to reach the challenging goal of 60-90 million subscribers in five years. ESPN+, Hulu, Disney+ combined could contribute 13% of Disney’s revenues by 2024, which does not intend to disturb existing channels and windows for catalogue and new content, aside from withdrawing content from Netflix.
February 11, 2019UK TV set viewing trends: linear audiences tumble in 2018
Market Outlook, Reports2018 was another bad year for traditional TV set viewing of broadcast channels, with a 5% decline year-on-year—its steepest since 2011. The decline accelerated among most demographics, but particularly for 16-34s, down 13% YOY from their already relatively low levels of TV viewing. Unmatched use, which includes viewing to Netflix, Amazon and YouTube, continues to grow, up 16% YOY, with both linear viewing and unmatched use becoming increasingly solitary activities. While heavier linear TV viewers are accounting for a greater proportion of linear TV viewing, it is the lighter TV viewers that are accounting for a greater proportion of unmatched use. Within the broadcast ecosystem, ITV had the strongest 2018 thanks to the FIFA World Cup, more Coronation Street, and Love Island. Most other broadcasters struggled in terms of viewing share, but the maturity of the market means major shifts continue to be rare.December 11, 2018Hulu casts a spell
Flash Report, ReportsWhen its acquisition of 21st Century Fox closes, Disney will own 60% of Hulu. If it bought Comcast’s 30% stake (and WarnerMedia’s 10%), it could fully leverage the platform for its US direct-to-consumer strategy. Comcast’s Hulu stake has little strategic value to it. We argue it should sell to Disney in exchange for long-term supply deals for ESPN, as well as for the upcoming Disney+ and Hulu, similar to its recent pacts with Amazon Prime and Netflix. This could naturally be extended to Sky in Europe depending on whether Disney decides to launch all direct-to-consumer or sticks with pay-TV in certain markets.October 25, 2018Disney, Fox, Sky and Comcast: future relationships
Focus Report, ReportsWith Comcast’s acquisition of Sky confirmed and Disney’s acquisition of 21st Century Fox on the path to regulatory clearance, how will the relationships of the various parties evolve?. Disney is betting on a standalone SVOD service in the US. However, its content deal with Sky in Europe is lucrative, and the performance of DisneyLife in the UK suggests its US strategy may not fit elsewhere. Sky’s relationships with Disney and Fox are crucial to its business. A joint pursuit to maximise returns from IP and distribution in Europe would be economically efficient for both Comcast/Sky and Disney/Fox.
October 3, 2018What Sky means for Comcast
Focus Report, ReportsComcast’s £30.6 billion acquisition of Sky brings to an end the long-running ownership battle since Disney agreed to tender Fox’s 39% stake to Comcast, also ending the Murdoch Family Trust’s interest in Sky. Comcast’s US domestic cable and global NBCU media businesses complement Sky’s European operation. Sky’s telecoms business is likely to expand, while the TV side should benefit from NBCU’s global distribution might, with greater revenues generated by its original content. Fox’s long-running battle with UK regulators over the public interest dimensions of the proposed Sky acquisition has also ended. Plurality of media is preserved by Comcast’s undertakings to support Sky News for 10 years.
August 1, 2018Hulu: Why Disney wants 21st Century Fox
Focus Report, ReportsDisney’s potential acquisition of certain 21st Century Fox assets is assuredly a play for further scale at a time when the company’s traditional domain, the family home, is increasingly welcoming services such as Netflix. The deal will consolidate Disney’s dominant film business. But also, the robustness of traditional television, especially 21CF’s cable interests, along with IP assets, will allow Disney to better control the inevitable viewer transition from linear to online and on-demand. Becoming the one media company with both a strong broadcast and online offering—the control of Hulu, a new Disney streaming service, ESPN+ and other add-on services—could grant Disney the ability to navigate the storm of change and dictate its own future.April 12, 2018TV set viewing trends: ‘Unmatched’ viewing growth and cha [...]
Focus Report, ReportsDespite the continued decline of linear TV set viewing through 2017 (-4%) and the first 12 weeks of 2018 (-3%), overall TV set usage remains flat at 4 hours/day due to the continued rise of unmatched activities (+19% in both cases). We consider the recent growth of unmatched use to be predominantly due to viewing of online-only services (i.e. Netflix, Amazon and YouTube), since time spent gaming is unlikely to have changed dramatically. The increase in unmatched usage since 2014 exceeds the total viewing to the most-watched broadcast channels for all age groups under 35. Within the shrinking pie of consolidated TV set viewing, market shares remain broadly flat. However, several key digital channels have shown surprising signs of recent decline, reflecting stalling growth from the multichannel long tail versus the main PSB channels.February 14, 2018Sky H1 2017/18 results: Solid platform, questions on content
ReportsSky H1 results were very solid, maintaining 5% revenue growth and 10% EBITDA growth, with Sky continuing to support a widening product portfolio and more expensive core products with strong cost control and execution. Subscriber volume growth was a little weak at the margin, but this will be helped by all-IP products expanding the economically addressable base in new, and existing, markets. There remain questions on content, with the outlook for premium football rights uncertain in the UK and Italy, and investment in Originals questionable given a mixed track record, but certainly with upsideSky H1 results were very solid, maintaining 5% revenue growth and 10% EBITDA growth, with Sky continuing to support a [...]
December 12, 2017Children’s changing video habits:And implications for the conte [...]
ReportsChildren’s media use and attitudes have dramatically changed over the last few years, stemming from the rapid take-up of smartphones and tablets. Traditional TV continues to decline at the expense of newer video services such as YouTube, Netflix and Amazon, with 43% of children aged 8-15 preferring YouTube videos over TV programmes.These online services offer content producers wider opportunities, but questions remain around the lack of regulation online, and the recent scandal around children’s safety on YouTube has heightened these concerns.
September 29, 2017Augmented reality: Apple’s next 10-year bet
ReportsThrough innovations in processing, connectivity and cameras, Apple’s new device lineup dispels fears that the importance of integrated, profitable mobile hardware is in terminal decline. With the broadest range of iPhone price points ever, Apple is confidently balancing between profits and growing the valuable installed base. Apple’s long way to an AR future is now well paved, but a weakness in mapping could prove to be an Achilles heel
June 8, 2017Nintendo Switching to a new console era
ReportsThe successful launch of the Nintendo Switch creates a new console model, and demonstrates the staying power and long term value of great franchises. Microsoft reveals the specification for Scorpio, but it won’t be enough to catch up to Sony. New franchises, and probably new leadership, will be the key to stopping Xbox sliding into irrelevance outside North America. Sony’s PlayStation 4 now exceeds 60m units worldwide, allowing Sony more freedom to publish a wide range of challenging creative console games, while VR games continue to gain momentum.
March 22, 2017360 and Virtual Reality: a new angle for video entertainment
ReportsThe temporary cool-off in hype around VR following a very buzzy 2016 is not reducing the flow of investment and talent into the industry, notably in video production utilising 360Video technology; setting the stage for the development of a truly new entertainment medium. Fully immersive interactive worlds will continue to be the mainstay of the video games industry, while video entertainment will exist in a multi-track environment, with some genres (news, documentaries , natural history) making 360Video mainstream well before long-form narrative-driven entertainment. 2017 will still be a challenging year for consumer device VR roll-out and mass market adoption; Oculus, Google, and Sony continue to seed the market, providing large scale funding and equipment directly to developers and content producers.
November 30, 2016The future of free-to-air television Part 2: Profiting from New F [...]
ReportsThe provision and consumption of on-demand video is exploding. FTA broadcasters must adapt to these new media and audience behaviour trends. They are well placed to exploit the significant opportunities that exists in redefined ‘TV’ and adjacent markets but the price of failure will be irrelevance and decline.November 17, 2016The studio model: stay tuned!
ReportsUS entertainment groups have not been disrupted by the rise of digital media. Long running franchises drive growth across diverse sectors, starting with pay-TV and SVOD. US television advertising is rising in line with GDP, while the online video ad market is flourishing, with much appearing alongside the majors’ scripted content. Studios’ cable channels are their most profitable assets, but M&As with distribution platforms, including Comcast’s acquisition of NBC Universal, have usually failed to deliver synergies. The Donald Trump presidency could leverage hostile public opinion towards mergers to undermine the AT&T bid for Time Warner; but it could also stimulate M&As if it granted tech companies a tax break to repatriate profits. A more protectionist administration could also bring about a less benevolent attitude towards majors’ foreign operations.
September 1, 2016Digital video retail market in the UK
ReportsThe UK retail market for digital movies has shown steady growth, but has not offset the decline in physical sales. While iTunes remains the UK market leader, Sky is clearly driving the growth with its Buy & Keep offering, backed up with the reassurance of physical product. However, a move away from the collector mentality alongside the growth of a subscription mentality will affect long term prospects. This is not helped by the consumer proposition for digital retail, which remains disjointed, lacks inter-device operability and a clear consumer benefit. Without co-ordinated efforts and investment from the studios, content owners and retailers to resolve these issues, we believe the opportunity for digital video retail in the UK is limited. Even with that, the EST market may never be as profitable as the DVD home video market.
April 12, 2016Media & Telecoms – 2016 & Beyond
ReportsEnders Analysis co-hosted its annual conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 8 March 2016. The event featured talks from 22 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts of the talks, and you will find accompanying slides for some of the presentations here.
March 10, 2016The sleeping giant wakes into DisneyLife
ReportsDisney surprised few with the launch of the SVOD service DisneyLife in the UK in November 2015, unlike its subsequent push into China. This could be seen as a mitigating strategy in face of partner streaming services beginning to invest increasingly in original content. But it also provides Disney with a streaming presence from which to build, or add spice to future licensing negotiations. Despite finding itself behind in the SVOD audience race, global affection for Disney, a typically handsome platform and a targeted roll-out should see success.
November 12, 2015Activision: the new King of the games industry
ReportsActivision’s announcement of its intention to buy King, the maker of Candy Crush, for $5.9 billion, is a major strategic play but positions the company well as it seeks to broaden its exposure to the growing mobile games market. Activision has answered the “build or buy” question by looking to King to strengthen its capabilities in key areas: specifically mobile development, online gameplay, customer acquisition and retention analytics, as well expanding its range of revenue streams. Other mobile and online game developers are now under renewed focus as possible acquisition targets by major developers. Enders expects more acquisitions in this space in the near term.
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