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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
  • September 30, 2019

    Time to liberalise UK TV advertising minutage

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    The UK TV advertising market, in decline since mid-2016, could benefit from a liberalisation of advertising minutage if Ofcom reviews COSTA and decides to make changes. Broadcasters could gain from the flexibility to devote up to 20% of peaktime minutes to advertising under the EU’s revised Audiovisual Media Services Directive (AVMSD). Ofcom could also level the playing field between PSB and non-PSB channels, although more minutes of advertising on TV is unlikely to inverse the medium’s decline.
  • September 24, 2019

    Amazon’s pivot to Marketplace

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    Amazon, the gatekeeper to 100 million Prime members, is increasingly reliant for growth on Marketplace, where third-party sellers compete with first-party products. Amazon’s multi-channel platform strategy delivers choice and low prices to customers, but third-party sellers have increasingly complained that their playing field is not level. After Amazon’s seller agreements were modified in August to implement a competition ruling in Germany, the European Commission is now investigating the data layer.
  • September 23, 2019

    European mobile in Q2 2019: No real let-up

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    European mobile revenue trends are not yet improving. Italy is still flat-lining at almost -10%, Spain worsened again, and the UK deteriorated sharply. France is the only good news story. 5G rollouts seem somewhat tentative. Indications from the UK that it is leading to a more competitive environment may discourage European operators from exacerbating already challenging markets. Prior year comparables for Southern Europe will be more flattering in the second half of this year although a doubling in the drag from intra EU calls will dampen any recovery
  • September 17, 2019

    Cut-price iPhones: Apple’s innovative approach

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    Apple’s iPhone launch event was relatively light on iPhone, which shared the stage with games, TV, Watch, iPad and retail announcements. This reflects Apple’s developing priorities: as iPhone sales soften, it needs to find new ways to extract value from the wealthy user base it has spent a decade nurturing. Apple has embraced this new strategy, offering a range of cheaper points of entry into its ecosystem, making the lost profits back on accessories or content subscriptions
  • Spotify’s freemium model gains traction
    Spotify’s freemium model gains traction
    September 16, 2019

    Spotify’s podcast play

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    Spotify is investing heavily in podcasting through acquisitions, original content and product innovation. It is under pressure to reduce dependence on record labels, whose power makes generating large profit margins difficult. Podcasts promise a non-music content genre where Spotify can capture more value. Secondary benefits abound: Spotify can take an active and lucrative role in modernising online audio advertising, it can solve the podcast discovery problem, and engagement across more forms of audio will improve retention
  • September 9, 2019

    UK mobile market Q2 2019: Reality bites, and will bite some more

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    The UK mobile market suffered its worst performance in five years this quarter with Vodafone alone, somewhat inexplicably, bucking the trend.5G capacity is impacting pricing trends with SIM-only packages flattening and unlimited packages increasing in popularity and complexity.As the operators invest in solving rural coverage and rolling out 5G, they will continue to be hit by regulation. Out-of-contract notifications and discounts are next in a long series of assaults.
    Sector .
  • September 4, 2019

    Under pressure, how UK TV is changing on the screen

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    Analysis of peak time TV programming on the main five PSB channels from 2002 to today shows a decline in the number of UK dramas broadcast—predominantly due to a contraction by ITV—though this has steadied since 2010. The resolve of the PSBs to maintain the number of dramas broadcast, despite rising costs, will mean an inevitable increase in the number of repeats and cheaper programming. A number of other observations are eye-catching: a greater turnover of drama series, entertainment formats failing at a higher rate and celebrity being treated as a panacea
  • August 21, 2019

    What Amazon and Uber can learn from Chinese food delivery apps

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    On 15th August 2019, Telstra announced its FY19 earnings. Falling ARPUs and NBN related impacts outweighed subscriber gains resulting in earnings declines. The Australian telco market remains competitive with nearly all sub-segments experiencing varying degrees of pricing pressure. Telstra as the market leader is most at risk as competitors increase share across different segments.
  • August 19, 2019

    Virgin Media UK: subscribers fall but ARPU grows

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    Virgin Media’s results were quite mixed, with the subscriber base shrinking in a very slow market, but ARPU and revenue returning to growth despite pricing pressure and regulatory drags. The outlook remains challenging, but market pricing does seem to be easing with no repeat of the damaging Openreach price cuts on the horizon. ‘Full fibre’ roll-outs will bring further challenges, but opportunities as well, with the accompanying focus on higher speeds likely to be a significant operational upside in the short to medium term.
  • August 16, 2019

    Sky UK Q2 2019 results: strong subscriber growth and long-term in [...]

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    Sky’s Q2 results were encouraging overall, with significant subscriber growth swinging direct-to-consumer revenue growth back to positive. ARPU declined once more, since new streaming customers are taking lower-priced products, but total revenue growth accelerated to 2.4%. EBITDA rose 20%, primarily due to the dropping out of some large one-off costs. Next quarter, Sky will begin making savings on the new Premier League rights contract, and increased football rights costs in Italy and Germany will have annualised out. Having launched Sky Studios in June, Sky is focused on producing original European content, with ambitions to double spend over the next five years, in a calibrated response to the Netflix-led race for content.
  • August 14, 2019

    BT: Temporary problems, long-term promise

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    BT’s divisions had contrasting fortunes in Q1 2019/20, with Consumer revenue growth sharply turning negative but Openreach external revenue growth accelerating to 10%, leaving the Group level unchanged at -1% and EBITDA on course to meet guidance. Consumer was hit by several regulatory and pricing factors mainly affecting mobile, and the short-term outlook remains tough, with a number of legacy pricing issues across fixed and mobile still to be resolved. Openreach is reaping the benefit of previous price declines annualizing out, allowing it to take full advantage of higher speed demand, and due to its full fibre roll-out this dynamic could persevere for years.
  • August 12, 2019

    Netflix’s US subscriber loss

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    Netflix lost 126,000 US subscribers (net) in Q2, the first time this has happened since 2011 when there was a price rise and the Qwikster debacle. This time a price rise—of one or two dollars, depending on tier—was one culprit, but the soft release schedule of big, returning original series, which usually give a bump to subscriber additions, played a part. Q3 has those series returns in spades, with Stranger Things, Orange is the New Black, Money Heist and Mindhunter likely driving subscriber numbers back up, but the suggestion that there is less flexibility to raise prices than previously assumed is a worry for Netflix and incoming competitors.
  • August 5, 2019

    Vodafone UK: some signs of life but an uncertain road to recovery

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    Vodafone’s newfound focus on performance improvement is showing signs of delivering – more on the cost than revenue side. Tower sharing has the potential to ultimately enhance European cashflow by 10%. The revenue picture is more mixed with churn improving but a very varied operational picture across its major European markets. Although Vodafone highlights the potential for German cable to drive growth post Liberty Global deal completion, their current 0.4% growth in Germany does not give cause for optimism
  • August 2, 2019

    O2 UK: Lower costs mitigate the challenging environment

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    O2’s service revenue growth slipped decisively into negative territory at -1.8% this quarter as the punishing regulatory regime took its toll. Underlying EBITDA growth of 4% was particularly impressive in the circumstances; likely aided by more direct distribution as well as tight cost control. The coming week will unveil how this compares to peers; we anticipate results which reflect a tough environment with little let-up on the horizon
  • July 24, 2019

    TalkTalk UK Q1 2019/20 results: Slower but steadier

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    TalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017. The subscriber drop was, however, modest and looks quite deliberate, with there being evidence of price firming in both direct and indirect channels supporting both ARPU and margin. This more cautious approach, if it can be sustained, puts the company on a much more healthy footing in our view, allowing it to achieve its financial targets without increasingly unsustainable existing customer price rises
  • July 23, 2019

    How could the BBC ever fund the over-75s?

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    In the BBC’s 2015 funding settlement commencing 2017, the Government assumed the BBC would fully fund the subsidy for over-75s to the tune of £750 million from 2020/21. Although the BBC’s settlement contained measures of “mitigation” worth c.£290 million, the BBC would still have faced a gap of c.£460 million to be funded by programme cuts and efficiencies (the BBC has pledged £250 million). Including c.£300 million from the annual adjustment of the licence fee for inflation from 2017 would help. However, this was always required to offset normal salary and cost increases to prevent a real decline in the BBC’s resources.
  • July 16, 2019

    Future of UK Public Service Media: EPG prominence to the fore

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    Ofcom’s recommendations to Government suggest updating EPG prominence legislation to cover connected TVs, and were warmly welcomed by the PSBs. Balancing various commercial, PSB and consumer interests will be key; determining what content qualifies for prominence will be a particularly thorny issue to resolve. Extending prominence to smart TVs and streaming sticks is critical, but implementation will be challenging
  • July 10, 2019

    Google’s Icarus moment

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    ­­­­Google’s advertising business has begun losing market share in the US, with competition from Amazon, Facebook and Microsoft intensifying in search and display. In response, the company is redoubling efforts to reshape its apps, services, and the entire web for more efficient monetisation, spelling uncertainty for partners and users. The adaptability and complexity of Google’s services reduce business risk from targeted regulatory measures, but increase the pressure for a radical intervention
  • July 8, 2019

    Roku: OTT pioneer under threat

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    With c.22m accounts across 44m devices, Roku has a US footprint that exceeds the largest pay-TV platforms. Limited competitive advantages highlights the scale of this achievement, but also leave the pioneering firm vulnerable to activities from bigger, wealthier rivals Apple, Amazon, and Google as well as pay-TV providers. The odds are stacked against Roku, but continuing the innovation in production and product that built its lead may secure future success
  • July 2, 2019

    A strict early privacy verdict for UK online advertising

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    The Information Commissioner’s Office reported on the UK online advertising sector, finding common industry practices unlawful under a strict interpretation of the GDPR and UK privacy law. The ICO focused on problems around transparency, consent and data sharing in the Real-Time-Bidding ecosystem, which comprises 16% of UK online ad spend, but most of publisher online ad revenue. The ICO is giving the industry six months to shape up, with the next steps still unclear. The Competition and Markets Authority has had under consideration an investigation into the entire online advertising sector, but is hampered by Brexit-related considerations.
  • July 1, 2019

    Reader-first news media: From transition to transformation

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    The number of people willing to pay for online news now roughly matches print paid circulation, and will soon be substantially greater, with publishers increasingly demonstrating that their strategies are influencing industry outcomes. Our thesis is that subscriptions work in some cases, but that a more systematic reader-first approach benefits all cases, recalibrating management focus to media’s core purpose. Effectively implementing such an approach is a more radical, transformative development than is sometimes assumed. The winners will deploy sophisticated, bespoke audience acquisition and retention funnels and undergo detailed appraisals of the trade-offs necessary for optimal user experiences.
  • June 27, 2019

    2019 UK TV advertising backstopped by Brexit

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    We expect total TV ad revenues to decline 3.3% in H1 2019, partly due to a return to Earth following the idyllic conditions of the World Cup in June 2018. Bad omens for advertising for H2 include the sagging economy since April and the Government’s impetus to achieve Brexit on 31 October, with or without a deal. Our forecast remains a 3% decline for total TV ad revenues for 2019 as a whole, with the risk of a more serious downturn in 2020 in the wake of Brexit.