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  • New
    June 17, 2019

    UK mobile market Q1 2019 – Pressure to mount after mixed bag in [...]

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    The UK mobile market posted its slowest growth in more than two years this quarter; just 0.5% service revenue growth although net adds were strong and churn was down. ARPU is under considerable pressure thanks to regulation limiting out-of-bundle spend which will exacerbate as the year progresses. Several other negative developments look set to be layered on the pressures this quarter, including a step-up in competitive intensity as 5G launches –  with H3G’s pricing of unlimited data a sign of a resurgence in its aggression
  • New
    June 13, 2019

    O2 UK: holding its own in toughening conditions

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    After a period of significant outperformance, O2’s Q1 results reverted to sector average revenue growth with ARPU down by 3% and all of the growth coming from ‘other’ revenues. Regulation limiting out-of-bundle spending has been a significant drag which will continue to worsen. A more competitive market and a punishing regulatory outlook will make it very challenging to sustain 2018 growth trends as this year progresses
  • New
    June 12, 2019

    Monetising user-generated video

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    ­­­­Video sharing platforms, like YouTube, Facebook Watch and Twitch, are vying to attract creators with monetisation options such as branded content and user payments. Advertising income, already limited for many small and medium-sized creators, has been undermined by YouTube’s response to brand safety concerns. The new tools come with their own obstacles, but are necessary to keep platforms attractive to video creators.
  • June 6, 2019

    Foxtel and OTT – a tough balancing act…

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    Foxtel has made several attempts at building a successful OTT service, but the results have been mixed so far. With Kayo and the potential launch of a ‘Netflix’ competitor, Foxtel is clearly aiming to increase household penetration beyond the 30% mark. However, in a crowded SVOD market and the potential for further disruption from new entrants and other players, Foxtel faces a tough battle.
  • June 5, 2019

    UK HFSS advertising ban consultation

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    The UK government is now consulting on a wider TV advertising ban until 9pm for food and drink high in fat, salt and sugar (HFSS), to combat childhood obesity. TV and TV advertising are not the cause of children being overweight or obese (O+O). Policy change in this area should inform and educate parents and young children, as they have in Leeds and Amsterdam. With 64% of the UK population being O+O, obesity is a complex societal issue requiring a multifaceted approach. The evidence from existing rules, and plummeting TV viewing amongst children, says that further restrictions on TV advertising will be ineffective in curbing the rise of obesity in the UK.
  • June 3, 2019

    TalkTalk UK: a welcome slowdown?

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    TalkTalk hit the bottom end of its (revised) 2018/19 EBITDA guidance, an achievement given fierce price competition and the margin-dilutive effect of high speed upgrades. This is however helped by one-off Openreach price cuts, and price rises for ancillary products (voice calls and pay-TV) and out-of-contract customers that look hard to sustain. Subscriber growth slowed dramatically in Q4, and continuing this more measured approach could help the company counter multiple market pressures, and perhaps even lead to a détente in the current price wars
  • May 29, 2019

    Facebook’s video strategy – loads of content but nothing to W [...]

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    By 2020, online video will account for 82% of all internet traffic in Australia. It is therefore not surprising that global tech giants are investing in and acquiring different genres of video content as they make a play to dominate online video consumption. Facebook’s half-hearted attempt at video streaming has had its fair share of issues so far and is playing catch up in a market already dominated by other SVOD players.
  • May 29, 2019

    Vodafone – pressure is still on

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    Vodafone’s operating performance worsened again this quarter with revenues down 3.3% and an extension of its underperformance relative to peers. Vodafone was right to cut its dividend given the extremity of the cash constraint. With financials in Euro terms in negative territory and worsening, an elevated and progressive dividend was not sustainable. In spite of difficult market conditions, the lower end of guidance looks achievable as comparables will become easier and football rights costs decline. The transformation programme will need to pay off fast to deliver any meaningful growth
  • May 28, 2019

    Virgin Media UK: contemplating its strategic future as pressure m [...]

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    Q1 results evidenced the downturn that Virgin Media had flagged in February. Consumer cable weakened sharply to just 1% growth vs 3%+ historically, partly thanks to ‘increased promotions in response to market dynamics’. Monetising Virgin’s speed advantage is becoming more challenging. Competition is hotting up for high-speed broadband in particular, fuelled by Openreach targets for smaller players and BT’s full fibre and G.fast rollouts. The company faces two vital strategic decisions – whether to wholesale BT’s fibre products outside its footprint, and whether to allow wholesale access to its own network. The former is likely to have the most legs and offers an alternative to further Lightning extension
  • May 27, 2019

    BT UK: Promising future, but investment required

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    BT is accelerating its ‘full fibre’ rollout, likely due to a combination of a successful build to date, very promising regulatory developments, and (let’s not deny it) worrying competitor build plans. Full year results were a little weak versus consensus, with guidance a little soft as well, leading to questions of how this can be funded, particularly the roll-out acceleration from 2021/22 to cover half the country by the mid-2020. Whatever the funding mechanism, we regard the investment as sound, with BT’s planned operational transformation also promising but potentially requiring further upfront investment
  • May 23, 2019

    Monthly Australian TMT Wrap: April 2019

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    We have seen an uptick in M&A activity in April on the back of a relatively quiet period in March. Strong deal activity has been distributed throughout the telecommunications, media and technology industries.
  • May 20, 2019

    Disney gets the final piece of Hulu

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    Disney 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 14, 2019

    Facebook doubles down on advertising

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    After the most challenging period in its history since 2012, Facebook has been able to stabilise its fundamental metrics and announce a major product overhaul. Despite talk of a business model pivot, Facebook’s focus remains on advertising, whose growth will remain concentrated in developed markets. News publishers wishing to stay relevant on the upgraded product set need to target exclusive layers of social interaction, with groups particularly important.
  • May 13, 2019

    Sky UK Q1 2019 results: weak ARPU hits bottom line

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    Sky made a surprisingly weak start to 2019, with revenue growth decelerating to 1.9% (the first time below 4% since the European businesses merged in 2015), due to weaker ARPU trends. However, Sky expects improvement to follow, blaming one-off factors in the quarter. The ARPU weakness drove EBITDA down 11.3%, but this should bounce back across the rest of 2019 as football rights costs turn from a drag to a positive. Comcast highlighted collaborations with Sky across tech, advertising, content distribution and even news, stating it is on track to achieve the anticipated $500 million in annual synergies over the next couple of years
  • May 7, 2019

    Sports streaming and 5G – everyone wants in…

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    Live sport remains an important content genre with the ability to attract consumer eyeballs and improve customer loyalty for both telcos and TV operators. However, TV operators (FTA and Pay TV) which until recently were the undisputed leaders in providing sports content, are being disrupted by sports streaming apps and telcos.
  • May 6, 2019

    UK Online media monetisation

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    The commercial challenges for media online are well-documented: online advertising pays for utilities such as search and social networking many times over, but not for media beyond user-generated content and low-investment journalism. There are also costs from a user perspective: wasted time, harmful content created to attract views, and the collection, sale, use and frequent leakage to criminals of personal data. Different sectors have found varying success with alternatives: games, video and music are attracting user payments, driving the paid online economy up 15.5% to £8.2 billion in 2018.
  • May 3, 2019

    Disney+ and Hulu: a flexible pitch to consumers

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    Disney 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.
  • May 2, 2019

    The new lifespan of UK TV content: wearing out more quickly

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    The economic model of TV production relies upon a vibrant market for back catalogue content; programming that has traditionally driven the desirability of many linear channels and slots. New release strategies, along with the hyper-concentrated viewing encouraged by video-on-demand and the round-the-clock availability of shows calls the longevity of the value of content into question. Our analysis suggests that programmes that previously would be leisurely distributed through broadcast could now feasibly be “worn out” more quickly. This could have ramifications for the whole sector, with more content investment required “upfront” and new financial and distribution models required.
  • April 29, 2019

    UK Out of Home: opportunities and threats crowd the doorway

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    Out of Home (OOH) is bucking the trend in UK traditional media and continues to grow, driven by the digitisation of inventory as the paper estate recedes. Digital OOH now accounts for 50% of total OOH ad spend. Soon digitisation will slow, as much OOH inventory cannot be converted from posters to digital screens; sustained growth will require a different form of change. The industry is amidst structural shift – driven by consolidation and automation – which could be wholly positive, but a lack of cooperation between major players risks stifling innovation and the medium’s growth.
     
  • April 17, 2019

    Cinema market trends 2019 – Australia and New Zealand

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    Cinema revenues in Australia are projected to decline gradually over the next 5 years primarily due to cheaper substitutes on offer for consumers. Netflix has paved the way for cinema disruption and distributed 75 original films in 2018. Fellow disrupter MoviePass has continued to struggle due to an unprofitable business model.
  • April 16, 2019

    Google and game streaming: double or quits

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    Google’s Stadia promises the most credible game streaming service yet, but building a subscription bundle of top titles would require an all-out bet in the sector. Google is building its own game studios – to win over others it must overcome a troubled history in gaming, mitigating risks to developer business models and creative integrity. Games are much more technically demanding to stream than video, presenting an advantage to Google, Microsoft and Amazon – and a boost to telecoms network demand, welcomed by operators.
  • April 12, 2019

    Monthly Australian TMT Wrap: March 2019

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    The number of announced transactions in March is low relative to February. A number of companies raised capital for a range of purposes, which were well received by the market. The volatility in Lyft’s share price post listing has shown that the market has struggled to price Lyft due to a lack of comparable listed companies in similar sector.
  • April 10, 2019

    Mobile Sports Streaming, Gaming and E-sports: A revenue opportuni [...]

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    There’s been a lot of speculation in the market about the revenue upside for 5G operators. Our latest Australian consumer survey shows there is good 5G market awareness and that 18% of subscribers would consider paying a price premium for a better 5G network experience. Venture Insights believes a 5G product which allows subscribers to move to a separate 5G slice which provides enhanced data throughput would clearly work with the gaming and sports consumer segments and benefit the network provider if offered as a (for example) $5 - $10 monthly option. The risk is that if Telcos stick with AYCE and unlimited plans, then the platform operators (such as Google Stadia) will benefit from the cloud based gaming subscriptions and take advantage of a better 5G network
  • April 5, 2019

    Apple’s showtime: everybody gets a service, partners get pennie [...]

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    ­­­­Apple is strengthening its household model by doubling down on family-friendly content subscriptions and payments. The model is reliant on hard bargains with mainly US partners, which risks sacrificing potential scale for a short-term boost in margin dollars. The new services offer glimpses of novel concepts, but stop short of taking risks to truly differentiate—a problem in TV, where Apple’s distribution advantage is slimmer than Oprah would have it.