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  • New
    July 20, 2018

    Focus back on ARPU: TalkTalk Group Q1 2018/19 results

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    TalkTalk had another strong quarter for broadband net adds, adding 80k versus its full year target of 150k+. All of this was due to strong wholesale, with retail net adds slightly negative, although in the market and seasonal context even this retail performance is quite respectable. On-net revenue growth improved strongly to around 4%, with its ARPU decline moderating to 2%, and ARPU should be helped further by price increases for existing and new customers alike in July. TalkTalk therefore looks well placed to hit full year targets, albeit with considerable help from its wholesale customers and some aggressive price increases. The focus back onto ARPU and away from (expensively) chasing retail subscriber growth is nonetheless to be applauded.  
  • New
    July 18, 2018

    Video viewing forecasts to 2027: No channels and everything to wa [...]

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    Video consumption will continue to shift to on-demand driven by high quality content and a better user experience. Is live TV dead? Is Netflix the future of TV? We address these questions and more in this report on the future of video consumption in Australia  
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  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    July 13, 2018

    UK TV platform forecasts to 2022: stability rules

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    Despite significant changes in people’s video viewing habits over the last few years, the TV platform landscape has appeared to reach an equilibrium. We expect pay-TV to retain its utility status for most existing customers. At the margins, movement from Sky and Virgin Media to free-to-air or pay-lite services will be mitigated by population growth. The excitable growth phases for Netflix and Amazon are likely to be over, but they have carved out prominent positions in the market. Meanwhile, the uncomplicated allure of free TV remains strong for half the UK.
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  • July 12, 2018

    Virtual Reality in 2018: Ready Player None?

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    Yet another annual hype cycle in 2018 can’t hide a tepid consumer appetite for all VR platforms and heavy weather for the industry as a whole. The launch of Oculus GO, a standalone device at an attractive price, is a milestone for VR; nevertheless, even Facebook remains worried about reach and the state of the industry. Mobile AR is still a strategic focus for Google and Apple, producing diverse applications instead of just games, but new headsets from Microsoft and Magic Leap which promise advanced MR experiences have no launch dates.
  • July 11, 2018

    Media transformation is just beginning…

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    The continued rise and dominance of Silicon Valley’s tech giants continue to vex traditional media operators and regulators, and equally, still fascinate and allure consumers and advertisers. Publishers and marketers can no longer rely on commoditised campaigns to reach target audiences, they must offer personalised and targeted experiences that consumers are willing to pay for either through attention or dollars.
  • July 9, 2018

    Europe’s Creative Hubs Update 2018

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    ​This third edition of Europe's Creative Hubs, produced on behalf of Bertelsmann, highlights the challenges of the digital age for enterprises of the creative industries of France, Germany and the UK from new consumer behaviors and the advent of new competitors and new forms of competition for users and customers from tech giants, Amazon, Facebook, Google and Netflix. The report calls upon policymakers in Europe to ensure a level playing field for traditional media in the key areas of taxation, competition law, privacy and data protection, highlighting the interaction of these three in the market for online advertising.  
  • July 4, 2018

    The eSports economy – it’s just getting started…

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    eSports has grown in popularity beyond being a niche form of entertainment to becoming a powerful means to engage millennial audiences. There’s significant investment from major media corporations, mainstream advertisers and professional sports franchises, demonstrating the emerging importance of eSports.
  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    June 29, 2018

    Is CRR still critical to protect advertisers from ITV?

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    The workings of the TV advertising market are a mystery to most. Overlaying an arcane ‘share of broadcast spend’ trading mechanism is regulation in the form of CRR, which has prevented anti-competitive activity by ITV since 2003. CRR will protect advertisers ‘for as long as needed’. Most advertisers we canvassed believe it should stay in place, but the sell-side and auditors say CRR has passed its ‘Best before’ date and is heading towards its ‘Use by’ date. We propose a review of CRR by the Competition and Markets Authority (CMA) to determine whether it is now helping or hindering the TV advertising ecosystem to become fit-for-purpose for the digital age.
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  • June 28, 2018

    The home screen: distribution, discovery and data on connected TV [...]

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    The TV, the main screen in the house, is rapidly becoming connected to the internet, opening a new front in the battle for people's attention. Tech players, pay-TV operators, and manufacturers are all aiming to control the user interface, ad delivery and data collection, leaving incumbent broadcaster interests less well represented. To protect their position, and the principles of public service broadcasting, broadcasters will have to work with each other at home and in Europe to leverage their content and social importance.  
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  • June 26, 2018

    Sky finally renews Serie A rights until 2021

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    Italy’s top football league awarded Sky the broadcasting rights to seven games per week from August 2018 until May 2021 for €780 million per year, up €208 million. UK-based Perform will carry three games for €193 million. Mediaset exits the market, freeing Sky from price competition. Besides Serie A, Sky added Mediaset’s Hollywood series and films to its content line up in May and will include the Champions League from August. We expect costs to rise by up to €500 million per year, which could be recouped by cuts in content and by recruiting Mediaset subscribers, notably on Sky’s new DTT feed. The best model for Perform would be to wholesale its new DAZN service to Sky, but even if a deal is found we doubt it could break even within the rights cycle.
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  • June 25, 2018

    Hitting targets, but pushing too hard? TalkTalk Group Q4 2017/18 [...]

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    TalkTalk hit both its subscriber and EBITDA targets for 2017/18, but Q4 contained some worrying trends including core consumer revenue in decline despite strong subscriber growth, with strong business revenue growth compensating. It held fast on guidance for 2018/19, although the 15% target underlying EBITDA growth is largely driven by regulated cost cuts, and revenue growth may be (again) achieved through the business side, which will be purely wholesale following the sale of its direct business customer base. Having spent the last few years not growing retail subscribers enough in a growing market, TalkTalk is now perhaps trying to grow too fast in a mature market, putting pressure on its ARPU from new and existing customers alike.  
  • June 19, 2018

    Advertising after the turning point: When offline is the exceptio [...]

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    Online advertising became the majority of all UK ad spend last year, in step with China but ahead of all other major markets. Direct response has further increased its share to 54% of UK ad spend, fuelled by the self-serve platforms of Google, Facebook and Amazon, while content media nets just 11% of the online advertising pot. We estimate that all online-delivered channels - including "pure play" online properties, broadcaster VOD, digital out-of-home and online radio - could account for well over 60% of UK ad spend by 2020, but only with improved commitment to industry governance.
  • June 15, 2018

    BBC iPlayer Boxsets: performance and what it tells us about on-de [...]

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    The BBC is concerned with the performance of the iPlayer, handicapped by its inability to monetise its content. Nevertheless, as it moves towards an all-IP future, it is experimenting with new content strategies. Data from Digital-i shows that the iPlayer's Christmas Boxsets brought 360,000 unique viewers/week to the BBC portfolio; an audience which skewed encouragingly young. Furthermore, case studies of two of the programmes made available over this period—Peaky Blinders ​and ​Hard Sun—provide insight into how people consume content delivered this way, something that has been difficult to ascertain due to the major SVODs' secretive treatment of their own data.

     
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  • June 14, 2018

    UK broadband, telephony and pay TV trends Q1 2018: Diverging stra [...]

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    UK residential communications market revenue growth strengthened in Q1, but this was entirely driven by an overlapping price increase from BT, and the decline in market volume growth continues. Continued pressure on both subscriber volume growth and ARPU has led to diverging strategies, with most operators focused on sustaining ARPU, but TalkTalk chasing volumes at the low end, with the former approach currently proving more successful. Looking forward, the benefit of BT’s price rise will fall away completely next quarter and market revenue growth will likely resume its downward trend, but the nadir may be within sight if the flight to quality persists at most operators  
  • June 12, 2018

    Advertising Market Outlook:The Digital juggernaut continues with [...]

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    Venture Insights expects total advertising spend to grow at a 2.7% CAGR to $17.4bn in 2022. Digital will account for the majority of the growth in AdEx through our forecast horizon increasing from 49% of the market today to 66% by 2022. While we see risks to TV audiences and hence ad revenues, we believe the TV model is far from dead. TV can continue to attract significant audience reach (and engagement) but it must evolve to stay relevant. Overall we forecast -3.7% CAGR (to FY22) for TV AdEx.
  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    June 11, 2018

    Disruption in Premier League football? 2018 auction finally over

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    The latest auction of live Premier League broadcast rights commencing in 2019/20 has concluded at last, with three different winners for the first time. The total sum has not been confirmed, but it looks to be down c. 10% from the previous auction at £1.55 billion per season—still substantial, and not far off the BBC’s entire TV content budget. As we predicted, Sky and BT remain dominant, winning 180 of the 200 games per season, whilst new entrant Amazon picked up one of the leftover packages at what looks to be a very low price.  
  • June 8, 2018

    UK mobile market Q1 2018: Primed for revenue acceleration

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    Service revenue growth for the UK mobile market improved in the first quarter of the year, lifting from 1.0% to 1.2%. There was an easing of the EU roaming regulatory impact helping growth improve, but the SIM-only drag likely grew to counteract this, suggesting a modest underlying improvement overall. We expect continued market growth improvement in the coming year due to a number of tailwinds, namely annual price rises, the arrival of IFRS 15, and the EU roaming impact dropping out. The fundamentals of the market remain solid: competition is rational; pricing is firm; data demand is strongly rising; supply is partially constrained; MVNOs and convergence do not appear a threat.  
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  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    June 6, 2018

    Football embraces Chinese ‘hot’ money – at a risk

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    In a display of chutzpah, Mediapro acquired the Ligue 1 domestic broadcasting rights from 2020-24 in what is the most disruptive shock to the French broadcasting industry in a generation; one that is likely to accelerate Canal+’s decline, force a review of the outdated regulatory framework, and possibly spur an M&A spree. The Mediapro move only makes sense as a highly speculative bid to resell the rights, or a dedicated channel, to French platforms in 2020. The odds are high that the broker ultimately fails to fulfil the contract, as just happened in Italy, where Sky is now expected to get the Serie A licence. Precedents of new entrants acquiring domestic top-flight rights bode poorly for Mediapro, and for the league. The Ligue 1 may live to regret the introduction of a ‘re-sell right’ into its licensing terms.  
  • June 4, 2018

    News brands and reader subscriptions: Towards a sustainable futur [...]

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    Print remains the primary revenue driver for most newspapers, but after 20 years of online news publishing we ask the critical question: how will publishers sustain newsrooms at scale when print has disappeared, or has contracted to a weekend luxury experience? The question needs to be answered in the context of both: 1) Rapidly declining advertising revenues in print media; and 2) A tiny and shrinking market share of digital advertising revenues. We believe these circumstances strongly imply the race for audience scale is more investor fallacy than a sustainable business prize; and besides, over-reliance on the advertising market for quality content provision is unappealing, particularly to proudly independent news publishers. Reader revenue, long assumed to be an impossibility for general quality digital news services, is the only answer. Registrations, membership and subscription models are being explored, tested, adopted or exploited by almost every major quality news provider in the US and Europe. The transition to subscription is hugely attractive, but requires first and foremost a new editorial strategy, requiring a wholesale business transformation.
  • May 31, 2018

    French, Spanish and Italian telcos won’t bankroll further footb [...]

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    The rights auction for France’s Ligue 1 will be held on 29 May. With Altice’s struggling subsidiary SFR unlikely to bid, Canal+ and BeIN Sports may not offer enough to meet reserve prices, triggering a postponement of the auction. In Spain, stiff fixed-line competition is shifting battlegrounds from football to scripted content. The Champions League has yet to sign up a platform for next season, while the upcoming 2019-22 La Liga rights auction may well fail to increase domestic revenues. With just 12 weeks before next season kicks off, Italy’s Serie A is also yet to secure a broadcaster, although we expect the league to back down and settle with Sky. In this deflationary environment, top clubs are eyeing a new Club Word Cup as an extra revenue stream – running the risk of further widening the financial chasm between themselves and smaller clubs.    
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  • May 30, 2018

    BT new Consumer strategy: Converging, but in a good way

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    BT has emphasised ‘convergence’ in its new Consumer strategy, but it has avoided most of the usual fixed-mobile convergence mistakes, with separate brands, minimal discounting and only slightly flawed converged products. The general strategy is to improve customer service to improve market share trends (particularly in broadband), enable premium products/positioning, and allow for cross-selling of a strong set of converged (in a broader sense) products, which is very sensible in our view. It does require extra spending in the short-term to improve customer service and the perception thereof (particularly in broadband) before premium positioning and cross-selling can be effective, therefore improved trends at the bottom line may take some time to come through.
  • May 25, 2018

    Retailing in the material world

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    Ecommerce has grown to 17.5% of retail spend, and accounts for almost all growth in spend. Physical retailers are beginning to feel the effects, with chains reporting falling profits and even bringing in administrators. The UK picture is muddied by a general lack of economic recovery, and irrelevant comparisons with the US. Finished goods stores, however, are clearly under extreme pressure. We are moving into a retail paradigm of online and offline elements being freely matched. To survive this transition, brick and mortar retailers have to become differentiated experiences and close the data gap with e-retailers      
  • May 24, 2018

    European video-on-demand: Playing catch-up to the UK

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    The UK continues to lead the EU5 in take-up and consumption of video-on-demand services, with close cultural alignment and a historic williness to pay for TV content making it a receptive home for US SVODs. Netflix dominates in most markets, benefiting from high-profile US imports and big-budget local productions. Local SVODs are struggling, with those operated by FTA broadcasters facing considerable challenges. Collaboration between local broadcasters and pay-TV platforms is essential if they are to hold at bay the threat of Netflix and co., with an increasingly favourable regulatory environment opening the door for unprecedented collaboration.      
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  • May 23, 2018

    BT Q4 2017/18 results: Slowing broadband bites, but recovery pos [...]

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    BT Group met expectations for the 2017/18 financial year, but future guidance is very modest compared to previous performance and financial market expectations, with 2018/19 revenue and EBITDA both guided to decline by around 2% with capex rising. In our view, this weakened outlook is primarily driven by the ongoing slowdown and increasing competitiveness of the UK broadband market, with operating metrics at BT Consumer particularly weak. BT’s re-vamped strategy looks good in parts, and could deliver the incremental improvements necessary to outperform the new (much more modest) expectations, helped by existing – and likely continued – strength in mobile.