Market Outlook

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  • 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
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    April 8, 2019

    The North heads south: European mobile in Q4 2018

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    European mobile service revenue growth dropped to -1.3% – its lowest level in three years – particularly disappointing as growth should be bouncing back post-EU roaming tariff cuts. Having enjoyed relatively favourable dynamics in 2018, the UK and Germany are facing marked changes in momentum from here. Regulation limiting intra-EU call prices could hit hard – up to 6% of revenues and 20% of EBITDA in the UK, although other EU countries may be less exposed due to lower tariffs currently.
  • April 2, 2019

    UK broadband, telephony and pay TV trends Q4 2018

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    Market revenue growth accelerated to 3% in Q4, but it might never reach this level again, being helped by a never-to-be-repeated BT overlapping price rise. With price rises becoming more challenging in general, and superfast pricing under pressure in particular, maintaining/increasing ARPUs is becoming more difficult despite superfast volumes surging. Openreach’s ultrafast roll-out has accelerated, challenging Virgin Media and bringing the prospect of further price premia, but perhaps too late to be of significant benefit in 2019.
  • March 28, 2019

    UK mobile market Q4 2018: Headwinds gathering for 2019

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    Following record growth last quarter, the UK mobile market took a step down to just 0.9% growth in the quarter to December on the back of increasing pressure in the business market and the impact of out-of-bundle limits. 2019 looks set to be a tough year for the sector with: a series of potentially painful regulatory hits; markedly lower price rises than last year; and early signs of a degree of creeping competitive intensity. We view 5G as a much-needed means of expanding capacity in the sector with upsides from M2M and IoT likely to remain relatively small.
  • March 19, 2019

    UK online advertising: Brexit year forecast and trends

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    UK online advertising spend continued its double-digit growth in 2018, up 11% to reach nearly £13bn in annual spend or 58% of the total advertising market, but a no-deal consumer downturn could nearly stop growth this year. Google, Facebook, Amazon, professional services firms and the largest marketing cloud companies are the biggest winners, while content media, media agencies and independent advertising technology firms languish. Self-regulation has improved as pressure mounts on advertising technology firms, but interventions by both privacy and competition authorities are now inevitable.
  • March 14, 2019

    Huawei and UK 5G: Identifying the risks

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    ­­­­Governments and operators have come under increasing pressure to exclude Huawei’s 5G equipment from national networks, with justifications usually kept vague and wide-ranging rather than specific, and no evidence provided. Given the role of Huawei’s 5G equipment in the network and the extent of existing testing and checking, realistic security risks that apply to Huawei and not to all other equipment suppliers are hard to conceive. The risks of any ban are however very real; with Huawei one of only three global-scale telecoms equipment suppliers, and the preferred early choice for 5G radio equipment in the UK, removing this choice will massively increase costs and delay roll-outs of cutting-edge connectivity.
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  • March 13, 2019

    Equity crowdfunding in Australia: We have lift-off

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    Equity crowdfunding has been celebrated as a game-changing alternative to venture capital and traditional business loans but has until recently been off limits to most retail investors. With the lifting of Australian restrictions on who can use equity crowdfunding platforms, there is cautious uptake from consumers and start-ups – with several platforms establishing a clear lead – but the claim of outsize returns will take time to be tested.
  • February 15, 2019

    European pay-TV: Resilient in the face of SVOD’s growth

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    Across the EU4, pay-TV is proving resilient in the face of fast growing Netflix (with Amazon trailing), confirming the catalysts of cord-cutting in the US are not present on this side of the Atlantic. Domestic SVOD has little traction so far. France's pay-TV market seems likely to see consolidation. Meanwhile, Germany's OTT sector is ebullient, with incumbents bringing an array of new or enhanced offers to market. Italy has been left with a sole major pay-TV platform—Sky—following Mediaset's withdrawal, while Spain's providers, by and large, are enjoying continued growth in subscriptions driven by converged bundles and discounts.
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  • February 13, 2019

    AI in Insurance: Disruption Assured

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    Artificial intelligence (AI) has enormous potential to disrupt across the data- and process-heavy insurance value chain. The growth of AI startups and adoption of (AI) by Australian insurers began in earnest over the last two years. The approach taken so far is one of collaboration rather than direct competition between incumbents and disruptors.
  • February 11, 2019

    UK TV set viewing trends: linear audiences tumble in 2018

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    2018 was another bad year for traditional TV set viewing of broadcast channels, with a 5% decline year-on-year—its steepest since 2011. The decline accelerated among most demographics, but particularly for 16-34s, down 13% YOY from their already relatively low levels of TV viewing. Unmatched use, which includes viewing to Netflix, Amazon and YouTube, continues to grow, up 16% YOY, with both linear viewing and unmatched use becoming increasingly solitary activities. While heavier linear TV viewers are accounting for a greater proportion of linear TV viewing, it is the lighter TV viewers that are accounting for a greater proportion of unmatched use. Within the broadcast ecosystem, ITV had the strongest 2018 thanks to the FIFA World Cup, more Coronation Street, and Love Island. Most other broadcasters struggled in terms of viewing share, but the maturity of the market means major shifts continue to be rare.
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  • February 6, 2019

    New Zealand Mobile Market Outlook

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    The New Zealand mobile market had been traditionally characterised as an oligopoly that is dominated by the prepaid segment with high prices, lack of product differentiation and low usage. However, this market is about to see a rise in competitive intensity driven by 2degrees’ move to gain share in the lucrative postpaid and business mobile segments. We believe Vodafone NZ is most at risk and could lose approximately 3% of its subscriber market share by 2022. The emergence of utility companies offering mobile products will also increase competition and create more “sticky” consumers. We forecast the mobile market will remain the largest segment in the telco market with NZ$3.2bn revenue by 2022.
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  • January 29, 2019

    AI in Financial Services: Who wins the future of banking?

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    Financial services are ripe for AI disruption; they are data-heavy, with significant potential for automation. The question is not if, but how fast, and how profoundly, would AI reshape the competitive landscape. In Australia, the AI ecosystem is exciting, but has yet to reach critical mass.
  • January 22, 2019

    New Zealand Telco Market Outlook

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    We expect the overall retail telco market to remain flat (2018-2022 CAGR 0.0%) with mobile growth driven by a move to post-paid plans and 4G/5G to offset the structural decline in fixed voice.  Total retail revenues will reach NZ$5.4bn in 2022. With UFB deployment well on track and increasing 4G penetration, we expect a rise in competitive intensity as players look to capture share across a broader set of product offerings. Fixed voice continues its structural decline as subscribers shun the landline and migrate away from standalone fixed voice services to mobile bundles and broadband + VOIP bundles. The UFB rollout is on track to reach 80% of the population by the end of 2019 and has been recently extended by the Government to cover up to 87% of the population by 2022. The NZ Government recently announced a set of reforms including a move towards utility-style regulation, copper deregulation in areas where UFB is available, and increased oversight over quality and reliability of broadband services.
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  • January 21, 2019

    UK advertising spend: Brexit year forecasts

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    Our central case forecast with orderly EU withdrawal predicts 2.7% growth for total UK advertising spend, down from 4.7% in 2018. We have a no-deal Brexit scenario that predicts a smaller advertising recession than in 2009, with total ad spend declining 3% and display down 5.3% in 2019. The total advertising figures partly mask the pressure on UK consumers, through an expansion of the measured advertising spend universe. This is due to significant self-serve online advertising growth by SMEs, and non-advertising marketing budgets moving to online advertising platforms. In a downturn, we’d expect advertisers to become more tactical, which would disproportionally affect display media including TV, which is further affected by declining commercial impacts among younger adults. Search and social advertising would see only small growth through the first year of a recession.
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  • January 11, 2019

    Scandinavian video

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    The Scandinavian markets sit at the cutting edge of the TV industry’s evolution—a product of tech-savvy citizens, superb connectivity, and generally high incomes. Take-up of SVOD is high, yet while this has had a pronounced effect on viewing, pay-TV subscription numbers have proved surprisingly resilient. Traditionally dominant public service broadcasters are under greater financial and political pressures, with the licence fee scrapped in both Denmark and Sweden.      
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  • European mobile in Q4 2016
    European mobile in Q4 2016
    January 10, 2019

    UK broadband, telephony and pay TV trends Q3 2018

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    Broadband market volume growth resumed its downward trend in the September quarter after a blip in the previous quarter that was likely caused by a wholesale transfer distorting the figures. Revenue growth, however, perked up to 1.9% from 1.7% in the previous quarter, an encouraging recovery especially given that it was not primarily driven by the timing of a price increase. ARPU growth improved across all four of the major operators, countering recent trends, with a focus on higher value offerings a common theme. High speed broadband adoption accelerated in the quarter across most operators, encouraged by Openreach’s volume discount offer, although this was partially driven by keener high speed pricing. Revenue growth at Virgin Media, Sky and TalkTalk converged at around 3%, with BT Consumer lagging at -1%. However, excluding the effect of BT’s shrinking telephony-only base and smoothing the sporadic boost of its 9-monthly price rise, BT Consumer’s revenue is in the middle of the pack at 3.0%      
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  • January 9, 2019

    European mobile in Q3 2018

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    European mobile service revenue growth slipped again this quarter to -1.0% as the UK and Germany disappointed and the Southern European countries worsened. The gap in service revenue growth rates between the Southern European countries and the UK and Germany increased again to a spectacular 5.5ppts. Spain was perhaps the biggest surprise this quarter with service revenue growth deteriorating by more than 3ppts; primarily due to Vodafone who posted a dire performance on all fronts. Next quarter, a somewhat delayed improvement in trend from the annualisation of roaming tariff cuts in the UK and Germany is possible, competitive intensity in France looks set to intensify as Iliad renews its aggression in the face of slowing momentum. Although there may be some reprieve on the rate of subscriber loss in Italy, Iliad is likely to continue to impose significant ARPU pressure on all operators.
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    December 20, 2018

    UK Auto classified marketplace

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    New car registrations will be down 6.3% (2.4m) in 2018, another year of decline from the 2016 peak of 2.7m, impacted by the soft consumer confidence in big-ticket purchases, with some spin down to used car sales. Auto Trader, despite the car industry’s downturn, has experienced only marginal pain thanks to the strategic focus on revenue diversification – principally into new cars, dealer auctions and enhanced subscription-based services for dealers. Our forecasts for media expenditure on cars in 2018 and 2019 are essentially flat. Auto Trader’s positioning offers insulation in a downturn, and we expect they will gain share in marketing spend, though not necessarily in terms of total consumer or industry expenditure.  
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  • December 19, 2018

    UK Recruitment classified marketplace

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    The UK’s labour market is tight, with an unemployment rate of 4.1%, the lowest since 1973. Peak vacancies and reports of skill shortages mask dull hiring plans amidst the gathering Brexit gloom, which will hit temporary hiring hard. We expect media expenditure to fall in 2018, substantially more among print publishers, spilling over into 2019 expenditure on media. The recruitment industry has benefited from the structural shift to outsourcing, and large agencies are portals in their own right, providing tools to companies to sift applicants to find the best match. Companies doing their own recruitment of professionals value listing on LinkedIn, the top UK site by visitors, and the efficiency of paying per applicant rather than for the listing. Second-placed Indeed has gained considerable momentum since being acquired by Japan’s Recruit Holdings in 2012. Indeed acquired third-placed Glassdoor in 2018, the latter having built its market position through user-generated reviews of employers. With Google serious again about Jobs, a sector (among others) it has tried to disrupt before, Monster and Jobsite are the more vulnerable to being crowded out.
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    December 18, 2018

    UK Vertical marketplaces overview and property classified outlook

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    The UK consumer’s loss of confidence since the June 2016 referendum vote in favour of Brexit has reduced the revenues of both estate agents and auto dealers, with knock-on effects on their media spend, entrenching further the leadership positions of Rightmove and Auto Trader respectively. Only the UK’s recruitment marketplace is buoyant with a record level of vacancies, benefiting general recruitment aggregator Indeed, although deepening Brexit gloom among businesses will rapidly melt away vacancies. With internet users flocking to portals and away from print media, advertisers have followed suit with media spend on these portals to stimulate purchaser interest, although transactions are still conducted offline. Facebook and Google, which have long histories of contesting markets for local advertisers with little success, have re-entered classifieds. Facebook Marketplace is now accepting listings from estate agents and dealers, expanding from C2C to B2C in homes and cars. Google Jobs launched in the UK in July 2018 and enjoys partnerships with all the major portals other than Indeed. The sharp decline in sales and shift to lettings, sluggish price growth and pressure on estate agents’ commissions, are making marketing key to driving transactional activity in a longer sales funnel. Rightmove’s revenues are on track for a 10% increase in 2018 on the uplift in average revenue per agent (ARPA). Zoopla's market share rose with the end of OnTheMarket's 'one-other-portal' rule for shareholders upon its AIM listing in February 2018.
  • December 17, 2018

    Australia Out-of-Home Market Outlook

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    As traditional media segments face the onslaught of digital, OOH advertising stands out as the only old media medium that is seeing sustained growth. Traditionally OOH was mostly a real estate play but with digitalisation, it’s now becoming a true digital medium that synergises with other digital media i.e. acquisitions by OOH of Junkee and increasingly personalisation not just on a small scale but on a large scale. The overall OOH market has grown at a 13.8% CAGR from FY14 to FY17. We forecast it grow at a 5.4% from FY17 to FY22. With more than A$1.75bn of M&A activity in the middle of CY2018, the Australian OOH market has gone from being dominated by four major players to being ruled by a just two major players, effectively giving rise to a ‘Duopoly’.  
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  • December 14, 2018

    UK mobile market Q3 2018

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    UK mobile market service revenue grew by 2.4% in Q3, a level not seen since early 2011. However, this 0.6ppt improvement on the growth rate in Q2 was very disappointing in the context of an expected 2-3ppt revenue growth bolster from the annualisation of roaming tariff cuts. EE and O2 shared the top spot for growth, more than double the growth rate of H3G and far ahead of Vodafone which remains in negative territory and had only the slightest uptick this quarter. O2 is likely to be hit by its well-publicised network blackout in December, but experience from a similar problem back in 2012 suggests this will be modest and temporary, and it is otherwise performing well.
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  • November 29, 2018

    Automotive Marketing Outlook 2018

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    After hitting record highs in March 2018, new car sales have recorded their seventh straight month of declining sales numbers as declining property prices and higher fuel costs are driving households to curb big-ticket purchases. Vehicle sales for October 2018 were 90,178 vehicles, down 5.3% YoY. Passenger cars declined 23.6% YoY driven in part by the preference for Sports Utility Vehicles (SUVs) which accounted for 44% of all new car sales in Australia for October 2018. While disruptors such as carsharing platforms (carnextdoor and goget) are reducing the need for car-ownership, there hasn’t been any visible impact on the automotive advertising market. We forecast Automotive Display Adex to grow at a 13.2% CAGR through to 2022 to A$891.2mn. Carsales is one of the largest players in the Australian online auto advertising market with a share of 37% in car listing volumes. Its average session duration is approximately two times that of its closest competitor, while the average number of daily unique visitors to its website is 57% higher.
  • November 28, 2018

    Telemedicine and AI Outlook in Primary Care

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    In this report, we provide a brief overview of ‘telemedicine’ including a 2035 forecast of the impact of telehealth tools, both human and artificial intelligence, in relation to ‘unreferred medical services’2 in the primary health market. This report does not assess or analyse the full potential for telemedicine which derives from other applications, such as remote surgical operations, sharing of digital health records or remote patient monitoring. These activities clearly would have significant additional benefits to the those explored in this report. The report outlines the importance of primary care in shaping Australian health and seizing ever-increasing health costs.