Focus Report

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  • New
    June 10, 2021

    NBN’s SAU Discussion Paper: Putting the broadband market on a n [...]

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    The NBN Co’s 7 June Discussion Paper on a new wholesale pricing scheme will, if implemented, shift Australia’s broadband industry economics onto a new path. The timing is no coincidence. As the migration to the NBN concludes and NBN’s focus shifts from rollout to operation and upgrade, the pressures on RSPs will also shift. The move to a flatter wholesale price structure will reinforce trends to more straightforward product sets that we already see in the market for broadband services. And with the threat of migration churn receding, RSPs will have both the opportunity and the incentive to look again at retail pricing.
  • May 31, 2021

    Trade books in the pandemic: Fair retail ending

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    • The consumer books market has flourished during the pandemic: following early worries, publishers are reporting strong growth and profits
    • However, bookshops, the most important point of contact between the industry and readers, are facing their toughest challenge yet as ecommerce booms and continued home-working saps high street footfall
    • Publishers and authors are embracing new, online ways of promoting titles. These will require new ways of working, and are not substitutes for dedicated shops, which must be protected as much as possible
  • May 28, 2021

    AU video viewing forecast to 2030: The new normal emerges

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    In our previous reports, we have raised issues around ARPU pressure on mobile service providers and highlighted the importance of price as a driver of telecommunications buying. We have said that competitive intensity (along with aftereffects of COVID-19) will put pressure on ARPUs which in turn requires a strong focus on keeping costs under control to maintain profitability.
  • May 26, 2021

    Vodafone: Throwing money at the problem

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    • Vodafone’s additional investment to boost a growth story that isn’t yet delivering failed to impress investors who value cashflow much more than promises for tomorrow, particularly given Vodafone’s track record with restructuring plans and product development
    • It’s a surprising time to be splashing the cash with leverage still finely balanced and riding on Vodafone delivering a 10ppt turnaround in EBITDA growth next year vs last. Commercial activity looks set to continue to be dominated by EBITDA promises
    • Selling a stake in Vantage Towers (temporarily) solved a leverage problem, but is creating a control problem, with the uncertain level of its future capex adding to investor concerns
  • May 24, 2021

    O2: Focus on profitability pays off

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    • The highlight of what seems set to be O2’s final results as a standalone company is OIBDA growth of almost 8% in spite of a drag from weaker net adds
    • It has also been a good quarter for O2 strategically with preliminary merger approval and contiguous 5G spectrum although that may be matched by its peers in subsequent deals given H3G’s openness to negotiation
    • The annualisation of COVID impacts as well as an improving mobility picture will provide a significant boost to trends, although the roaming drag seems unlikely to reverse any time soon and O2’s relative growth will suffer from lower in-contract price rises than peers this spring
  • May 20, 2021

    BT: The J-curve cometh

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    • BT ended a very challenging 2020/21 financial year with its worst quarter yet for EBITDA growth, as the third national lockdown impacted mobile, offices, pubs/clubs and installation revenue streams
    • There are many turnaround drivers ahead though, including price rises, back book effects annualising, lockdown effect reversals, and full fibre benefits, but returning to revenue growth by the end of the year still looks challenging
    • The acceleration and expansion of fibre build is very positive in our view, but BT has given no guidance on the future benefits aside from capex returning to normal levels, which is doing it no favours with investors
  • May 19, 2021

    Publishing in the pandemic: Print squeeze, digital boost

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    • The press industry lost £1 billion off the topline from the calamitous decline in print revenues due to pandemic-related mobility restrictions, partly offset by gains on digital subscriptions, much harder to precisely size in revenue terms
    • Trapped at home for the most part, online traffic to BBC News and news publisher services boomed. Popular news sites marginally grew digital advertising while the quality nationals attracted 800,000 new paying subscribers to reach nearly three million in 2020
    • The outlook for 2021, in the transition to the ‘new normal’, is mixed. Consumer work patterns and news, information and entertainment habits are unlikely to ‘bounce back’ to pre-pandemic levels, placing free commuter titles at particular risk. Signs of confidence through online innovation are welcome
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  • May 18, 2021

    Sky v.2.0: Aggregation, originals and fibre

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    • After a strong post-pandemic rebound, Sky has the opportunity to leverage its strong reputation with consumers to meet the challenge posed by new competitors and the studios’ direct-to-consumer transition, establishing Sky Q as the ultimate gatekeeper of video subscription homes
    • Sports rights costs in Germany and Italy have been cut significantly, while Sky’s spend on UK Premier League rights will decrease in real terms. Savings will ease the financing of the shift to original content, which, associated with owner Comcast’s NBCU output, anchors the aggregation strategy
    • Fibre deployment in the UK and Italy presents a subscriber and revenue growth opportunity, and underpins the gradual shift away from satellite to online content distribution
  • May 16, 2021

    Virgin Media: Ending on a high

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    • Virgin Media’s subscriber boom continued into 2021, despite a marked price rise in Q1, benefiting from lockdown and continued demand for higher speed broadband
    • ARPU remained weak in Q1, suppressing revenue growth, but this will recover (somewhat) in Q2 as the price rise takes effect, countering the current disconnect between volume and revenue growth
    • The merger with O2 is set to complete in June, with much operational pre-merger preparation already done, but the key strategic questions appear yet to be decided
  • May 13, 2021

    Venture Insights AU survey 2021: Broadband market converges as NB [...]

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    In our previous reports, we have raised issues around ARPU pressure on mobile service providers and highlighted the importance of price as a driver of telecommunications buying. We have said that competitive intensity (along with aftereffects of COVID-19) will put pressure on ARPUs which in turn requires a strong focus on keeping costs under control to maintain profitability.
  • May 13, 2021

    TV advertising: Evolving the model

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    Advertising income has been the lifeblood of commercial TV for decades, but declining linear audiences—combined with digital video alternatives—mean the TV advertising model must evolve to ensure it remains as potent a medium for brands as ever. Lack of effective audience measurement and somewhat opaque advertiser/agency/sales house relationships are hampering linear TV advertising revenues. Both issues need resolving to underpin a healthier ecosystem overall. Flexibility is key to this evolution. A move to audience buys across most linear and BVOD inventory would provide greater flexibility and targeting for advertisers, and would sit alongside some premium context buys. A greater onus on volume deals would give broadcasters more certainty to invest in content and their advertising propositions.
  • May 6, 2021

    Venture Insights NZ survey 2021: No end in sight for NZ mobile co [...]

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    In our previous reports, we have raised issues around ARPU pressure on mobile service providers and highlighted the importance of price as a driver of telecommunications buying. We have said that competitive intensity (along with aftereffects of COVID-19) will put pressure on ARPUs which in turn requires a strong focus on keeping costs under control to maintain profitability.
  • May 5, 2021

    BBC licence fee settlement: Push outside London will need further [...]

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    • The launch of the BBC’s blueprint for its approach to the Nations and Regions is timely, coinciding with the kick-off of negotiations over the BBC’s financial settlement for the next charter period
    • If the licence fee were to be frozen or only an inflationary increase applied, by 2027 the BBC’s annual licence income would be £302-539 million lower in real terms. Just to maintain the BBC's current levels of funding, it would need an inflationary increase, plus an annual increase of 2.0%
    • The BBC's commercial ventures are unlikely to cover any shortfall in licence fee income. To generate sufficient dividends to cover the shortfall for the PSB group, income produced by BBC Studios (and the BBC’s other commercial ventures) would need to grow by an order of magnitude
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  • April 28, 2021

    Venture Insights AU survey 2021: Mobile buying and churn drivers [...]

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    Venture Insights performs an annual consumer survey on mobile service and handset purchases across Australia. It asks questions around willingness to pay, intentions to switch service providers and handsets, and key factors responsible for this switching. We also ask which service provider the respondents are switching to, and thus determine the service providers that will gain or lose from this churn. The survey shows that price remains a key driver for mobile purchasing, underlining the difficulty of maintaining price increases that would lift ARPUs. Price continues to drive interest in MVNOs, but we expect that the MNOs can at least defend market share through sub-brands like Belong and now GoMo and Felix.
  • April 16, 2021

    US content distribution: Studios go direct to consumer

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    Despite relying on a narrow IP base, US content production is booming, overwhelming other markets and seeking alternative distribution to cinemas. Responding to the rise of Netflix and Amazon Prime, studios seek to shift distribution from wholesale to retail—but only Disney may succeed. Most content is likely to remain accessed by consumers through bundles. Provided they engage with aggregation, European broadcasters can adjust to the new studio model.
  • April 15, 2021

    Venture Insights NZ survey 2021: Mobile media use and telco oppor [...]

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    Venture Insights performs an annual consumer survey on mobile media and mobile gaming across New Zealand (NZ). It asks questions around video streaming that consumers use, willingness to pay services, mobile gaming, and implications for 5G and telcos. Our latest survey was conducted in March 2021 with 1,009 New Zealand respondents, and the key findings have been presented here. The survey results show that there is a significant and growing segment of consumers using mobile to watch video services, including sport. The share of respondents that never watch mobile video has fallen significantly over the last year. Further, there is a persistent opportunity for telcos to upsell 5G services to both video viewers and gamers.
  • April 8, 2021

    Venture Insights AU survey 2021: Consumer interest in mobile medi [...]

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    Venture Insights performs an annual consumer survey on mobile media and mobile gaming across Australia. It asks questions around video streaming services the consumers use, willingness to pay for video streaming services, mobile gaming, and implications for 5G and telcos. Our latest Australia survey was conducted in March 2021, and the key findings are presented here. The survey results show that there is a significant and stable segment of consumers using mobile to watch video services, including sport, that remans unaffected by the impact of the pandemic. Further, there is a persistent opportunity for telcos to upsell 5G services to both video viewers and gamers.
  • April 8, 2021

    The recovery stutters: UK broadband, telephony and pay TV trends [...]

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    • Market revenue growth sunk back to -3% in Q4 from -2% in Q3, with further backbook pricing and lockdown effects to blame.
    • Backbook pricing will improve with numerous price increases announced, but these will only start to take effect in Q2 2021.
    • Demand for broadband and ultrafast looks promising, but will also take time to filter through to revenue, with Q1 again lockdown affected.

  • April 1, 2021

    Pandemic accelerates mobile payments in New Zealand

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    Payments has emerged as a key area of digital disruption. The shift from physical to electronic payments has seen an ever-expanding range of payment methods replacing cash. From mobile banking and contactless cards to phone payments and bespoke apps, the payment landscape is undergoing a quiet revolution. The emergence of e-commerce and proximity payment and the increasing adoption of smartphones and high-speed mobile data network have further boosted the adoption of mobile payment. Smartphone technology has lowered barriers to entry and enabled new entrants to take on traditional financial services firms by unbundling payments from account-holding and lending, and by offering more targeted products and customer experiences. Incumbent payments providers, principally banks, have responded by launching their own online payment services.
  • March 30, 2021

    (UK) Ecommerce forecasts 2021: Pandemic shifts remain for now

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    • Goods ecommerce accelerated in 2020 by four years above trend to reach 28% of retail sales (excl. fuels) from 19% in 2019. We anticipate that ecommerce in 2021 will remain in the same share range of 27-29%
    • Food and drink grew faster than any online category in 2020, doubling to over 10% of associated sales. Aside from food and drink, the agony of zero sales on the shuttered high street continued, with over half of all sales being online in 2020, likely persisting in Q1 2021
    • Offline retailing will recover due to deconfinement and the share of ecommerce will edge down in Q2 2021 and thereafter, but these new shopping habits will be sticky and anchored by persistent work-from-home, driving all retailers that are left standing to massively adopt online channels and associated advertising media
  • March 25, 2021

    Venture Insights Consumer Survey: COVID-19 boosting mobile payme [...]

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    Payment services have been subjected to significant disruption in recent years. New entrants have exploited the prevalence of smartphones to offer their own app-based payment services. Smartphone technology has lowered barriers to entry and enabled new entrants to take on traditional financial services firms by unbundling payments from account-holding and lending, and by offering more targeted products and customer experiences. Incumbent payments providers, principally banks, have responded by launching their own online payment services.
  • March 25, 2021

    UK’s Creative Industries: Boosting the regional economy

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    • The Creative Industries accounted for 6% of UK GVA in 2019, more than the automotive, aerospace, life sciences and oil and gas industries combined. The UK’s Creative Industries are the largest in Europe and are central to promoting the UK’s soft power globally.
    • At the core of the creative economy is the AV sector, which, in turn, is driven by the UK’s PSBs. In 2019, the PSBs were responsible for 61% of primary commissions outside London and are the pillar upon which much additional regional economic activity depends.
    • Going forward, only the PSBs are likely to have the willingness and scale to invest in production centres outside London with sufficient gravitational pull to reorientate the wider creative economy towards the nations and regions.
  • March 25, 2021

    A worthwhile flurry of activity? Mobile towers companies in focus

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    • The wave of deal-making in the European towers sector is driven by cash-strapped telcos seeking a form of sale and leaseback financing
    • While the operators are incentivised to provide a medium-term growth trajectory for these towers companies, sustainability of that growth is more questionable, especially as 5G will not require additional base stations
    • Cellnex continues to insinuate itself into the UK market with its most recent deal signaling the ultimate unwinding of the MBNL JV. Further UK towers consolidation seems a long way off but could facilitate, or indeed be facilitated by, consolidation at the MNO level
  • March 18, 2021

    Programmatic will drive future OOH growth, but Google competition [...]

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    Outdoor, or out-of-home (OOH), 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.