Focus Report

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  • February 17, 2020

    Vodafone plods on

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    Vodafone’s revenue performance remains decidedly lacklustre. Italy and Spain are struggling to bounce back, Germany is still languishing, and the UK’s 0.6% service revenue growth is the highlight of the quarter. Liberty Global’s assets are disappointing both in terms of opening financials (revenues and EBITDA 8% and 12% lower than expected respectively) and outlook (now growing at half the rate at the time of deal announcement and guidance for Germany as a whole to be ‘flattish’). Vodafone’s guidance for a pickup in revenue growth to more than 1% in Q4 is encouraging but these are very tentative steps forward in challenging times
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  • February 14, 2020

    TalkTalk UK: FibreNation sorted but challenges remain

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    TalkTalk’s subscriber base and revenue fell again in Q3, and ARPU continued to decline despite good growth in its higher ARPU (but even higher wholesale cost) high speed base. The sale of FibreNation to CityFibre and the accompanying wholesale deal provides much needed cash and de-risking, although the migration to full fibre still brings challenges to TalkTalk given its low price focus. TalkTalk’s shorter term operational outlook is also still very challenging, with growing EBITDA in 2020/21 particularly difficult given stable/declining ARPU and the rising wholesale costs of migrating to high speed broadband
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  • February 13, 2020

    New Zealand 5G update: Still waiting on spectrum auctions with 2d [...]

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    As New Zealand moves towards mass-scale 5G rollout, competition among telcos is forming and the debate around the spectrum sharing is intensifying. Limited 5G services are now being offered by Spark and Vodafone to select customers and they are counting on being able to provide mobile, fixed wireless and IoT services using the same network in the near future to increase their revenues. In this report, we look at the readiness of NZ consumers to move to 5G, the current state of critical spectrum holdings and the key 5G developments in NZ in 2019.
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  • February 12, 2020

    Sky UK FY 2019 results: a solid first full year under Comcast

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    Despite operating in a challenging market, Sky has continued to increase revenues, with the resilient performance of its direct-to-consumer and content businesses offsetting the disappointing drop in advertising income. Across FY 2019, EBITDA was up 12.2%; profit growth driven by a significant reduction in “other” costs as large one-off effects disappear and cost-cutting continues. Extended distribution deals with Netflix and WarnerMedia will protect Sky’s content proposition for the coming future, as would the mooted integration of Disney+
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  • February 12, 2020

    BT: Searching for the nadir

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    BT had a weak December quarter, with revenue falling 3% and EBITDA 4%, despite a recovery at Openreach, mainly driven by tough competition and regulatory hits, with operating metrics solid but not noticeably improving. These hits look set to continue, so the company’s hopes of a return to EBITDA growth in 2020/21 probably hinge on brand and service improvements actually becoming visible in operating performance. A successful full fibre roll-out would be a boon for BT in the longer term, and regulatory developments are headed in the right direction, if not quite there yet. However, its affordability without a dividend cut remains questionable in the current challenging environment
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  • February 11, 2020

    Subscription BBC?

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    The Government appears set on reducing the scale and scope of the BBC by dismantling the licence fee, and in its place pushing for subscription or making payment voluntary, without any evidence of the likely impact. DTT – the UK’s largest TV platform – has no conditional access capability, and so implementation would require another costly and long-term switchover. A voluntary licence fee would inevitably lead to a huge reduction in income. If just those on income-related benefits were not to pay, the shortfall would be over £500 million – in addition to the £250 million the BBC will be funding for over-75s receiving Pension Credit
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  • February 5, 2020

    Australian 5G update: Telstra and Optus build continues, VHA entr [...]

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    2019 was the year 5G launched in Australia making it one of the first countries in the world to launch 5G services. Whilst Telstra and Optus both launched in 2019, Telstra’s focus was centered on 5G mobile services whereas Optus’ 5G launch centered on 5G fixed wireless broadband services. 2020 will see further competition from the MNOs through continued rollout, VHA entry and potential pricing changes. We expect Telstra to continue its rapid 5G footprint expansion in Australia, including to the regional areas. In this report, we look at the readiness of consumers to move to 5G and the key Australian 5G developments in 2019.
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  • February 4, 2020

    Winners and losers as the UK fibres up

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    The speeds made possible by full fibre build are unnecessary for most users in the short term, giving limited commercial advantage to those that can offer them, but are likely to prove essential in the medium/long term. The economics of full-scale, independent alternative networks look very challenging in our view – especially without the support of Sky – although there are some limited arbitrage/cherry-picking opportunities. The Openreach full fibre model makes economic sense under Ofcom’s proposed regulatory framework, provided it retains the lion’s share of the market, although considerable risks remain
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  • January 30, 2020

    Top 5 Media Trends in 2020

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    The 2010s have been an extraordinary decade in media, demonstrating the speed of disruption in the media industry and the need for market participants to constantly innovate to stay relevant and unlock new sources of growth. So, what can we expect to be the top trends to arise in 2020? At first glance, we expect: 1. The SVOD wars to continue to fragment the media industry 2. BVOD will become a centrepiece of the ‘Total TV’ ecosystem 3. Ephemeral social media will see exponentially growing revenue 4. Podcast revenues to grow due to improved infrastructure enabling effective monetisation and a simplified listening experience for greater adoption 5. Pushback against tech giants to create a more level playing field between local and global players This report explores these trends in greater detail and how they will impact the media landscape.
  • January 29, 2020

    Insurtech White Paper Part I: Global Insurtech Trends

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    This is the first of three reports in Venture Insights’ series on Insurtech trends and development locally and globally. The term ‘insurtech’ is a combination of ‘insurance’ and ‘technology’, inspired by the term ‘fintech’. Insurance is a notoriously slow-moving industry, with high barriers to entry, complex business models and stringent regulatory requirements; it has lagged consumer tech and even other financial services in updating its offerings and technology stacks. However, the ‘insurtech revolution’ has been seen as a potential challenge to that complacency.
  • January 28, 2020

    Peacock: the future of ad-supported TV brands?

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    Comcast’s new, on-demand service, launching in April, is an attempt to break NBCU’s unsustainable dependence on sales to Netflix and other SVODs. Peacock provides a path of digital transition for advertising-funded TV with a revamped low-load, high cost-per-thousand model. Reach will be built with a free online tier and distribution to Comcast subscribers. Peacock seeks carriage from other pay-TV operators, with which reciprocal deals would make sense (i.e. HBO Max on Comcast alongside Peacock on AT&T’s platforms. In Europe, where Comcast has no existing major free-TV offering to transition, launching Peacock will be challenging but could present Sky with ideas to counterweigh Netflix on its own service
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  • January 23, 2020

    Can’t spell Media without AI – AI in Media and Video Consumpt [...]

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    Australians love their video content, but as the infamously high piracy of Game of Thrones has gone to show, we don’t like to pay ridiculous amounts for our weekly fix. New entrants in the video market have heeded the call for more affordable content in Australia with the launch of multiple SVOD services in recent years, including the recent announcement of the Disney+ November 2019 launch in Australia. However, overall market growth has been – and will continue to be – relatively stagnant as SVOD replaces incumbent video entertainment platforms.
  • January 22, 2020

    Subscription game services: moving beyond core gamers

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    Subscription game services will finally allow platform owners and developers to deliver truly accessible gaming experiences for all, across devices, at a lower entry price point, and curated to ensure consumer safety—both in terms of cost transparency and content types. Consumer comfort with subscriptions should be embraced by the games industry and has already started in mobile. Apple’s Arcade subscription is the test case, providing focused all you can eat games that minimise exposure to violent gameplay, and the ‘free to play’ wild west. Core gamers remain the most vital and profitable games customer segment, but they have been overserved and are an obstacle to broadening the reach of games. Now is the time to move beyond this group, to restructure, expand, and normalise the games market in the next decade.
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    January 14, 2020

    Netflix: churn, content release and marketing

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    Netflix’s US business provides an insight into the patterns of the subscriber take-up of a maturing streaming service, trends that the comparatively nascent international markets may yet have ahead. Through analysis of the relationship between Netflix’s churn, subscriber additions, marketing spend and content release schedule, a clearer view of the rhythms of the streaming business become apparent. Rising churn, and correlation—such as the emphasis on returning original series during the year’s turbulent second quarter—gives guidance on Netflix’s likely future course, including its use of debt.
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  • Smart Home
    Smart Home
    December 17, 2019

    The rise of smart homes in Australia – we are only getting star [...]

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    In the past few years, there’s been a rapid increase in the use of home automation devices and technologies across the world. The mass adoption of connected devices and the rise of Internet of Things (IoT) has led to the rise of the Smart Home market which offers consumers interconnected and improved access to a range of services. In August 2019, Venture Insights conducted a consumer survey focussing on electricity, solar energy, batteries, smart homes, electric vehicles and climate change in the Australian market. In this report, we present the key insights drawn from the smart home section of the survey and discuss the current state of the smart home market in Australia, key drivers for future growth, the ideal ecosystem provider and the scope for bundled services.

  • December 16, 2019

    The ayes have it: DMGT scoops the i

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    Low-priced quality tabloid the i has been bought by DMGT for £49.6m, a 4.5x multiple on historical operating profit. The sale provides a lifeline to JPI Media as Reach has withdrawn from negotiations for the local estate. The i signals growing confidence in consumer media at DMGT after a long period rebalancing the portfolio towards B2B, and new ownership serves as an opportunity to rethink and drive the i’s online service. Although the acquisition will be reviewed by the Competition and Markets Authority (CMA), we expect the deal to pass
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  • December 13, 2019

    Cybercrime as a Service: Six critical questions every business mu [...]

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    The rising costs of cybercrime are driven by an increase in online devices, more cyberattacks and the growing sophistication of cybercriminals and their toolkits
  • December 12, 2019

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

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    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.

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  • December 10, 2019

    Pressure on Facebook over political advertising

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    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.
  • December 9, 2019

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

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    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.

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    December 6, 2019

    IoT Growth and Cyber Security

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    The Internet of Things represents a significant and growing target area for cyber criminals. Individuals, businesses and governments need to include IoT related cyber risks in their security controls and plans.

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  • December 4, 2019

    Virgin Media UK: challenging quarter, but opportunities ahead

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    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

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    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

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    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