Focus Report

Filter by

Filter by

Filter by

  • New
    December 12, 2019

    Australia fixed broadband pricing trends – price differentials [...]

    ,

    Broadband services are critical enablers for access to information, employment, markets and key services. Consumer demand for broadband services has grown rapidly in the last decade with household penetration increasing to 85% in 2017 compared to 64% in 2009. This report analyses the competitive environment in the fixed broadband market and focuses on consumer price trends in the fixed broadband market for the NBN. In particular, we analyse the major RSPs – Telstra, Optus, TPG and Aussie Broadband to evaluate their broadband offerings in the retail market.

    Sector , .
  • New
    December 10, 2019

    Pressure on Facebook over political advertising

    ,
    With elections in the UK in December, and in the US in 2020, online political advertising is receiving intense scrutiny. Google has announced limits on targeting, while Twitter has banned politicians from buying ads. Facebook is the big player in online political ads, and it continues to allow targeted political ads, and to carve them out as exempt from fact-checking. Facebook wants to keep Republicans on side and surf the revenue opportunity, but pressure will increase with US elections, and we expect Facebook to bring in restrictions.
  • New
    December 9, 2019

    Prime Video Channels: part of Amazon UK’s bigger picture

    ,

    Amazon Channels’ aggregation of third-party streaming services enhances the consumer appeal of its wider video proposition, provides incremental revenues and increases the stickiness of the Prime shopping service. Content partners range from major players (e.g. Discovery and ITV) to the more niche (e.g. MUBI and Tastemade), who all benefit from a ready-made platform, billing relationships and a receptive subscriber base. But the revenue shares, data costs and lack of direct customer relationships remain too high a price for some. Two and a half years on from its UK launch, opportunities for live, ad-supported and bundled content are diversifying the platform, but Amazon must prioritise discovery within Prime Video to continue to flourish.

  • December 4, 2019

    Virgin Media UK: challenging quarter, but opportunities ahead

    ,

    Virgin Media had a challenging quarter, with its early price rise driving weak subscriber figures and product spin-down, resulting in reduced revenue growth and an accelerated OCF decline. The market environment remains challenging with very competitive pricing on superfast and little push for ultrafast, but superfast pricing is easing and competitors’ ultrafast pushes should accelerate in 2020. Full fibre roll-outs remain a threat and an opportunity in almost equal measure, with Virgin Media’s positioning likely to be clarified as the regulatory mist clears over the next year

  • December 3, 2019

    TalkTalk UK: A discount brand pushing a premium product

    ,

    TalkTalk enjoyed impressive EBITDA growth of 14% in H1 19/20, despite revenue growth pitching down sharply in Q2, and gross margin falling due to the rapid adoption of high speed broadband. The fall in costs was driven by a combination of good expense control and lower subscriber acquisition costs, in part due to improved efficiency, but in part due to a falling subscriber base, which is not a sustainable route to earnings growth. While the current dynamics are challenging, market prices have been firming recently, and should firm further as ultrafast becomes more popular, but TalkTalk needs to move to a more premium pricing position to take full advantage

  • December 2, 2019

    Champions League senses end of growth cycle

    ,

    With pay-TV competition faltering, UEFA is aiming to stimulate demand for 2021-24 TV rights with early auctions, a possible relaunch of FTA broadcasts, and even, unrealistically, by considering an online service of its own. In the recently completed UK auction, facing no major threat from Sky, BT kept the rights at an almost flat price – probably missing a cost saving opportunity. In the upcoming auctions on the Continent, with former buyers such as SFR, Mediaset and Vodafone having cut back on premium sports, the major platforms’ bids will probably be unchallenged

  • November 26, 2019

    Turnaround still elusive at Vodafone Europe

    ,

    Vodafone continues to strike a very shareholder-friendly focus and tone but its operating performance remains decidedly muted, with revenue growth up just a touch but EBITDA growth halved. Vodafone’s drive for convergence is still costing it dearly. German mobile ARPU is down 7% and Liberty Global’s assets disappointed on their first consolidation with cashflow enhancement less than half that expected. Apart from its ill-advised convergence strategy, Vodafone is making many sensible moves and there are indications that its unlimited plans are gaining traction. With leverage tight, pressure is mounting for demonstrable improvements in the financials some time very soon.

  • November 26, 2019

    Local UK media at a crossroads: from incremental to radical innov [...]

    , ,
    Local newspapers are often identified as the most disrupted of all media. The impact of declining news media has widespread implications: for the healthy functioning of democracy, community and social cohesion as well as for local business and trade. In this report we look briefly at the existential state of local news media, and spell out a radical new approach that would require a complete rethink of local journalism and its commercial and operating models. We reimagine local media as a start-up would, rather than as incumbents with expensive models to maintain.
    Sector , , .
  • November 25, 2019

    Sky UK Q3 2019 results: balanced, but more to come?

    ,

    While Sky’s overall revenues continue to rise, Q3’s growth was hampered by a significant fall in advertising revenue and to a lesser extent a slowdown in content sales. Underlying EBITDA growth was in the mid-teens. Next quarter, Sky will continue to benefit from lower Premier League rights costs versus last season, and profit appears on track to meet full year guidance. Q3 saw a rare decline in Sky’s total number of customers due to the conclusion of Game of Thrones. Sky clearly understands the value of unique content—recently extending its HBO deal. In our view, this was essential, since without a distribution deal for Disney+ (launching in the UK in March) Sky would lose Disney’s alluring content.

  • November 19, 2019

    Health tech making big inroads in Australia’s health sector

    ,
    Venture Insights believes that increases in Australian health costs are unsustainable into the medium term.  Health costs are on the rise, with the FY17 real rate of growth for health spending increasing to 4.7%, relative to the 5-year average of 3.1%. Given that health costs exceed inflation and growth in GDP, it is only natural that Federal and State governments will either need to restrict their services or find substantial productivity gains to maintain health services over the medium and longer term. In this report we explore the roll of health platforms to deliver productivity gains. Telstra Health having invested around $235 million on various platforms and software is arguably the largest of any such players in the Australia market. Is Telstra the natural party to own Telstra Health or is it time that a new owner steps up and takes it to the next phase of its evolution?
  • November 18, 2019

    O2 UK doing better than appears in tough times

    ,
    In spite of total revenue growth of 4%, O2’s service revenue growth took another step down to -3% this quarter, consistent with the worsening environment and EE’s results. Its true performance is likely better than reported as IFRS15 has an artificially dampening effect on its service revenue as a consequence of O2’s Custom Plans, and is something of a boost to its impressive 6% EBITDA growth. O2 needs to continue to pedal hard to keep ahead of this challenging environment – with little let-up on the regulatory front, more aggression from Vodafone and H3G, and a potential regulatory hit to its Custom Plans
    Sector .
  • FLASH – SVOD first battle won, but watch the data
    November 18, 2019

    Free video! Apple TV+, Disney+, HBO Max and Peacock in a rush for [...]

    ,
    New SVOD entrants are prioritising reach over revenue in the US with extensive ‘free’ offers, including Apple TV+ (to hardware buyers), Disney+ (to Verizon customers), HBO Max (to HBO subscribers) and Comcast’s Peacock (to basic cable homes). This is the latest development in an unfolding global story of partnerships, continuing on from multiple Netflix and Amazon distribution deals with platforms, bringing benefits to both parties. In Europe, Sky faces price pressure, but it has secured its HBO partnership and can now talk to Disney from a position of strength.
  • November 14, 2019

    Webscale Playbook: Baidu

    ,
    Baidu, often referred to as “China’s Google”, is embarking on a new journey to pursue growth outside its core search and advertising business. That’s vital as the online advertising business is maturing, yet Baidu continues to rely heavily on it (80% of 2017 revenues).
    Sector , .
  • Magazine stand
    Magazine stand
    November 12, 2019

    UK’s TI Media goes back to the Future

    ,
    Specialist publisher Future has offered £140m for generalist TI Media’s 41 brands, which will give Future 220 global brands upon expected completion in Spring 2020. The acquisition, which includes wholesaler Marketforce, is contingent upon shareholder and CMA approval. Future is the darling of publisher stocks, pursuing an energetic growth and scale strategy, and diversifying revenues through digital and experience innovation. How Future’s culture of experimentation and optimisation will work with TI Media’s more general portfolio is an open question. Only time will tell if the overall portfolio balance will work.
    Sector , .
  • November 11, 2019

    UK’s BT: Bumps on the road to recovery

    ,
    BT suffered a weak Q2 with revenue and (particularly) EBITDA declines accelerating, but this was mainly down to timing (particularly at Openreach, which will likely recover in Q3), with the company confident in maintaining full year expectations. BT’s fixed broadband business enjoyed some recovery as the pricing environment improves, but will suffer another price timing bump next quarter, and its mobile business is suffering from a tough market environment that is unlikely to improve in the short term. The company is busy re-branding, re-positioning and transforming, but the outlook for football rights costs and fibre roll-out regulation will dominate in the short term, and further bumps (such as the Virgin MVNO contract loss) may emerge.
    Sector , , .
  • November 8, 2019

    Streaming wars and the future of Foxtel

    ,
    Up until a few years ago, Foxtel has enjoyed an uninterrupted run as the monopoly premium Pay TV provider in Australia. But the arrival of international SVOD players and the rise of local challengers has made a dent in Foxtel’s business.We believe the challenges that Foxtel faces are structural in nature and Foxtel could find it tough to recover lost ground.
  • November 6, 2019

    Champions League rights auction: BT’s cost-cutting opportunity

    ,

    Champions League UK TV rights, at £394m/season, appear to have reached a ceiling, with costs on a per match basis now comparable to the more-desirable Premier League. In the imminent auction, current rightsholder BT is the clear frontrunner. Potential competitors appear reluctant: Sky Sports has thrived since losing the rights in 2015, and no other players can reasonably compete at this spend. This presents BT with a golden opportunity to rein in costs, with a view to moving BT Sport towards breakeven at an important time for the wider business, considering the financial pressure it is facing

  • November 4, 2019

    Peak football revenues and post-boom scenarios

    ,

    Broadcast licensing revenues for football are likely to be ex-growth in the top five markets in Europe, with some limited upside from sponsorship and out-of-Europe rights. The broadcast revenue boom stoked the rise of super clubs with global fan bases, feeding player transfer valuations, and a potential downturn of the latter could magnify the impact of the revenue decline. The leagues in Italy, France and Spain are more exposed to the risks of broadcast licensing revenue decline, while the Premier League’s model looks robust

  • October 31, 2019

    Australian MVNO Market Overview

    ,
    On 29th October 2019, Venture Insights presented their views on the Australian MVNO market at Telstra Wholesale’s Business Connect conference in Sydney.Global MVNO market size is expected to nearly double between 2018 to 2025, growing at CAGR of about 8%.The Australian MVNO market has grown from 1.5m subscribers in 2010 to 3.2m subscribers in 2018. MVNO subscribers have grown at a CAGR of 10% (2011-18) compared with MNO handset subscribers which have grown at a CAGR of 0.9%. However, MVNOs have over 20% in metro areas – demonstrating continued market focus on pricing. In addition, our survey results showed strong future demand for MVNOs. ~40% of metro respondents who were considering shifting, indicating they would select a MVNO. As such, we expect MVNO subscriber market share to continue to rise especially in metro areas. With a focus on niche segments or linkages to strong brands, the test of most MVNOs is (i) how well they know their target customers, (ii) what other services could be bundled and (iii) are there new market segments to target.
    Sector .
  • October 30, 2019

    Webscale Playbook: Alphabet

    ,
    Alphabet is out to prove that it is more than just an advertising business. That’s important as the company remains heavily exposed to ads, which accounted for about 86% of 2017 revenues. Yet, Alphabet is facing new competition in ads from Amazon, plus ongoing regulatory scrutiny in Europe. Fortunately the company is generating incredible amounts of cash each quarter, and now has just under $102B in cash & stocks on hand. That has allowed the company to invest heavily in its network, with capex amounting to a telco-like 17.2% of revenues over the last four quarters. Alphabet also spends another ~15% of revenues on R&D. The goal of these investments is help the company enter (or create) new markets, with less ad-dependent business models. Alphabet’s vast network infra supports the company’s cloud computing and device portfolio, as well as AI-based projects in transportation (Waymo), logistics (Project Wing), and healthcare (Verily). As a result, Alphabet’s network, IT & software capex has soared, to $8.2B over the 4Q17-3Q18 period (from $4.1B the year prior).
    Sector , .
  • October 28, 2019

    UK SVOD subscriber trends: who is buying and how many subs

    ,
    With a raft of new streaming services about to hit, there remains a question as to the appetite for multiple subscriptions. Pay-TV subscribers continue to be more likely to take SVOD services—especially when they are distributed on their set-top boxes—however the average number of services per household is well below one. Greater variety and quality of services will likely increase the average number of subscriptions but given the siloing nature of these services, Netflix’s incumbency, library and distribution are its strength; new entrants will battle for a supplementary role
    Sector , .
  • October 24, 2019

    Webscale Playbook: Alibaba

    ,
    Alibaba, once viewed as China’s answer to Amazon, has grown into a giant since its inception in 1999. Though still just about a fifth of Amazon’s size (by revenues), Alibaba has grown rapidly and outshines Amazon in some areas. Its scale in e-commerce is impressive: (i) Alibaba ships 12 million packages a day, 4x of Amazon; and, (ii) Alibaba’s “Singles Day” has become the world’s biggest shopping event. Alibaba has invested heavily in network infrastructure to support its businesses, not just e-commerce but also cloud computing, audio/video streaming, and devices. As a result, Alibaba’s network-related demand has soared in the recent times. It now accounts for over 5% of global webscale network/IT capex, from about 1% in 2012. Alibaba’s network spend share will continue to grow, but will be reshaped by the ongoing US-China trade war.
    Sector , .
  • October 23, 2019

    UK Telecoms sector returns: Money’s too tight to mention

    ,
    Mobile sector returns are low, particularly for smaller-scale operators, with H3G earning less than its cost of capital. Regulatory initiatives, spectrum auctions and 5G look set to worsen this picture as H3G strives to gain viable scale. Back-book pricing is crucial to the returns of fixed challengers. Regulatory intervention is likely to lead to a waterbed effect in the fixed sector and exacerbate challenges in mobile. New entrant business case in full fibre is limited to de facto monopoly opportunities. There is the potential for BT’s returns to increase markedly if it gets full fibre right but new entrants’ inferior economics are unlikely to offer sufficient investor appeal
    Sector .
  • October 22, 2019

    Programmatic OOH: Coming soon to a billboard near you?

    ,
    Programmatic advertising in OOH is still a new concept in Australia and the groundwork in terms of digitisation and audience measurement is still being laid. While, many OOH players have introduced their version of programmatic advertising, the risk of having a fragmented market with multiple proprietary systems means that programmatic OOH may fail to take off. Outdoor, or out-of-home, 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. Traditionally OOH was mostly a real estate or location play but with digitisation, it’s now becoming increasingly focused on audience targeting and improving engagement. Industry players are looking to bring additional functionality, formatting and effectiveness to advertisers beyond just digitising existing sites, along with investing in improving measurement technology to help build further advertiser confidence in out-of-home. In particular, programmatic advertising which has transformed the online advertising space could play an important role in the growth of the OOH market going forward. In this report, we explore what programmatic advertising is and the impact it could have on the OOH market. We also look at the key challenges that OOH players face and the risk of Google, a global leader in programmatic advertising, making an entry into the OOH market.
    Sector .