Digital Media

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    June 18, 2015

    FLASH – Ten Network gains a big brother in Foxtel

    While the capital raising (including Foxtel’s investment) provides some breathing space, it does not provide enough capacity to compete with Nine and Seven. The bigger benefit potentially comes from partnering with Foxtel for content coupled with merging the sales function with MCN. On the former, we believe the ACCC will have serious concerns.

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    June 16, 2015

    Mary Meeker’s State of the Internet

    We have synthesised the key themes from the latest Internet Trends Report from Mary Meeker at Kleiner Perkins Caufield & Byers. We don’t purport this to be our own ideas, but provide it as an interesting resource (see below for Australian ramifications). Three key trends are evident to us from the report: the shift to mobile, the shift to a service economy and finally that disruption of traditional industries is likely to continue for some time yet.

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    June 10, 2015

    The evolution will be televised – assessing the SVOD impact

    The launch of three SVOD platforms heralds a new era in the Australian video market. Our proprietary survey of 5,300 consumers suggests there will be high adoption of SVOD with Netflix the early winner. We expect SVOD to have the highest impact on TVOD and Physical Media. The risk to Pay TV is real, but not game changing while the immediate risk to FTA is less apparent.

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    June 2, 2015

    Moneyball — Sports rights negotiations

    Sports remain critical for both FTA and Pay TV. We believe that Nine has the greatest capacity to pay for rights and will retain its NRL contract, albeit with lower inflation than Seven and Ten will face as they chase AFL rights. We expect Foxtel to retain its Pay rights (possibly increasing its tally of NRL games per week).
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    December 16, 2014

    Online media services report (Ofcom PSB review)

    Ofcom released its third review of public service broadcasting on 15 December, focusing on "Public Service Content in a Connected Society". Enders Analysis assessed how online media services contributed to the provision of public service content over the course of the review period (2008-2013). This report represents a summary and key themes of our findings. Relevant media content is now available over the internet from a huge number of sources. As well as affecting how media content is distributed and consumed, the internet is changing the nature of content available and funding models. In a few genres, the internet is now ahead of traditional broadcasting, notably those in which interactivity is a major enhancement, such as music and education. In news and current affairs, online services often match television's output, arguably providing more breadth and depth, though accuracy and impartiality are less assured.

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    December 16, 2014

    Case studies: BuzzFeed, Vice, YouTube vloggers (Ofcom PSB review)

    As part of Ofcom's third review of public service broadcasting, Enders Analysis produced 12 case studies of online media services, examining how they contribute to the public service objectives. The full report and all case studies are available on the Ofcom website. Here we present three of those case studies: BuzzFeed, Vice, and the phenomenon of YouTube ‘vloggers' producing content for young people. These represent sources of innovative content unlike that found in traditional media. The online services we assess attract younger audiences than traditional media, and also have a more flexible approach to monetising those audiences, relying on sponsorship, creative solutions and even events and book deals to capitalise on their brands.

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    December 9, 2014

    UK advertising expenditure forecast 2014-2016

    2014 has been a good year for total advertising, which we forecast to grow by 5.5% across the year; display advertising spend is also forecast to grow by over 6% year-on-year. This is largely thanks to a positive economic backdrop, where we have seen a significant rise in consumer expenditure over the last two years. Online advertising spend has been the biggest recipient of growing ad spend, with 20+% growth last year, this year and next. This has mostly been to the detriment of print revenues, where online classified search solutions, amongst other factors like declining circulation, have disrupted print marketplaces. Video has been the largest growth area in internet advertising as online video consumption increases. Up to now online spend has largely been accretive to TV budgets but we are starting to see some advertisers switch to online video spend. However we do not expect TV to suffer in the same way as press.

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    December 1, 2014

    From MCN to next generation media company – Part 1: Funding

    Investment in YouTube multi-channel networks (MCNs) has accelerated this year and now exceeds $1.65 billion, triple the aggregate value invested to 2013. This step-up is being driven primarily by traditional media companies. Due to the growth of the overall online video sector, we expect to see continued demand for MCNs, as further opportunities for vertical, geographical and functional consolidation exist. While acquisition prices of close to $1 billion (incl. earn-outs) are high, valuation comparables seem relatively consistent and modest in comparison to other media/tech deals. Further, we see MCN investments as part of a wider shift as media companies extend their core business to digital.

  • November 21, 2014

    Auto classified advertising

    Auto is the third category in our annual series of reports on UK classified advertising, following UK classifieds and recruitment category outlook [2014-094] and Property classified advertising [2014-098]. In this year's report we analyse the key drivers in the communications marketplace for used cars, notably transaction volumes and pricing. Overall the auto market is relatively buoyant, with the post-recession new car sales boom starting to feed into used car revenues in 2014, although the sustainability of this credit fuelled growth is far from certain. Auto Trader remains the big beast in the marketplace after Guardian Media Group sold its 50.1% stake to Apax Partners earlier this year. Apax will likely be considering an IPO or sale, particularly as market conditions look favourable in 2015 and Auto Trader's strong leadership position looks largely unchallenged.

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    November 20, 2014

    Property classified advertising

    Property is the second category in our annual series of reports on UK classified advertising, following UK classifieds overview and recruitment outlook [2014-094] and with autos to follow. Our property market report analyses the key drivers in the communications marketplace for UK domestic property, notably transaction rates and house prices, but also substantial developments in government policy. We analyse the estate agent marketplace and drill down into expenditure patterns for property advertising across all media, and provide five year forecasts. We also look at the online property advertising markets in Australia and the USA to gain a broader perspective on potential developments in the UK. Here, the competitive battle between Rightmove and Zoopla continues; estate agents' plans to stem the duopoly's pricing power with the launch of a new portal in January will struggle to achieve consumer momentum unless there is a huge marketing investment.

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    November 7, 2014

    UK classifieds overview and recruitment category outlook

    Our annual series of reports on expenditure on advertising in the classified verticals of jobs, property and autos, kicks off with an overview of the print-to-digital transition that lifted the share of digital to over 50% in 2013. In summary, digital consumers are becoming more sophisticated and mobile traffic growth is accelerating. We thus expect classified services to be under pressure to innovate more in the next two to three years, particularly with improved mobile offerings. Zoopla Property Group, Rightmove's rival in the UK online property duopoly, floated on the LSE in early 2014; both companies retain healthy growth prospects with pricing power stemming from a lack of credible competitors. In contrast, Guardian Media Group announced the sale of its 50.1% stake in Auto Trader to private equity group Apax in January. However, as the used car market starts to recover, the timing could be right in 2015 for Auto Trader to come back to the market in some form.

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    November 7, 2014

    Sky Deutschland delivers weak ARPU ahead of BSkyB takeover

    The Sky Deutschland platform, which will fall under BSkyB's control by mid-November, continues to post strong subscriber growth, thanks to steady gross additions and declining churn. However, average revenue per user remains flat year-on-year, and declined sequentially for the first time in over four years, raising questions about Sky's capacity to sustain the recent pace of total revenue growth. On current trends, cash flow break-even will not happen before the last quarter of calendar 2016, months before the possible price hike from a new domestic football rights auction. Meanwhile, deployment of Sky's connected TV services appears to be keeping OTT competitors at bay.

  • November 3, 2014

    UK Digital Upfronts and internet advertising update

    Recently we attended the inaugural IABUK Digital Upfronts, in which 11 digital media companies pitched their wares to advertising agencies and advertisers. UK growth in internet advertising is now powered by mobile, social and video, and these three areas were the focus of the Upfronts. The Upfronts are symbolic of the rising importance of digital media in the UK and worldwide; while broadcast television remains the king of brand advertising, marketing and advertising are becoming less TV-centric.

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    October 20, 2014

    The TV/digital advertising debate

    In the last few days we have spoken to key authorities in advertising in the US, UK and Europe. We have been exploring the critical debate: the degree to which TV consumption and TV advertising are shifting and will shift to digital. Recent media coverage has argued traditional TV business models could start to unravel in the medium term. We disagree.

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    October 1, 2014

    Privacy and the internet in the UK

    UK consumers have embraced data-hungry services like Facebook and Google, but many also have concerns about privacy online; young people have a more positive view of the trade-off and know how to avoid targeted advertising. Businesses that are conscientious about consumers' data gain their trust, and the gap between trusted brands and the market as a whole may grow substantially in the future. Despite Edward Snowden's revelations on ‘Big brother snooping', the UK Government has secured vast access to communications data without serious challenge to date.

  • September 15, 2014

    Wrists and rewards: Apple’s announcements

    Apple has fulfilled its promise to roll out innovative new products this year, launching Apple Watch into the nascent wearables market and Apple Pay, a new mobile payments service, as well as moving the iPhone into ‘phablet' territory. The larger-screened 6 and 6 Plus should revive growth in iPhone sales and ASP, as well as providing another variable to compete in the mid-tier handset segment; Apple Pay further enhances Apple's lock on its customer base. Apple Watch's likely impact is harder to discern; to date sales of smartwatches have been lacklustre but although Apple's offering is the most commercially viable yet, it still feels like a solution in need of a problem.

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    September 14, 2014

    Media in an independent Scotland

    Claire Enders set out the implications of a Yes vote in the Scottish independence referendum for the media available in Scotland. She critically examines the SNP's plans for a Scottish media, and argues that Scotland's small population would make an independent media hard to sustain. When the effect of a nationalist 'nation-building' project is factored in too, the overall results would be serious costs to the quality of democracy Scots enjoy.

  • September 7, 2014

    UKTV on the up and up

    UKTV has posted annual figures showing record revenues of ÂŁ278 million in 2013, with the promise of more to come after an H1 2014 that has seen it overtake Channel 4 main channel in adult 16+ Share of Commercial Impact (SOCI) delivery and now closing in on Sky and Channel 5. The rise in adult 16+ SOCI every year since the Freeview launch in 2002 reflects not only UKTV's preparedness to invest more in content over time, but also management focus on EPG prominence on the free-to-air and pay platforms and unceasing willingness to try new channel ideas. The challenge now facing the UKTV group is how to maintain growth in an increasingly connected TV landscape. Innovative UKTV Play notwithstanding, the big question comes down to content strategy and the scale of future investment.
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    July 31, 2014

    UK consumer magazines: digital and innovation

    In second of a two part report examining the current state of the UK consumer magazines sector we focus on magazine brands' prospects in the rapidly evolving digital and mobile landscape. Mobile presents a particularly fundamental challenge to magazines, but should also act as a spur for publisher innovation; we assess the degree of digital engagement from publishers thus far and consider the risks in ecommerce and opportunities in video. We look in detail at Good Housekeeping's digital transformation strategy to be rolled out in the second half of 2014, which combines digital utility solutions with bold innovations in its heritage brand. More publisher experimentation is a pressing necessity; the industry appears to have stalled on digital innovation and new competitors such as Houzz and Wiggle are occupying the digital ground in traditional magazine territory.

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    July 30, 2014

    UK consumer magazines: two-tier market opens up

    In the first of a two part report examining the current state of the UK consumer magazines sector we focus on the performance of print as paid circulation decline accelerated, down 10% year-on-year in 2013. We consider the display advertising performance of both consumer and B2B magazines across print and digital and provide forecasts through to 2017. While print display advertising decline in consumer magazines accelerated to 8% in 2013, digital growth was 12%, and digital advertising is now 15% of total display revenues. The market is increasingly diverging between rapidly declining titles and differentiated (often high value) titles with older readerships where circulation falls have been less severe. We expect this gap to continue to widen as an improving economy provides some respite for stronger titles over the next two years.

     
  • July 13, 2014

    UK quarterly internet trends Q1 2014

    The UK's love affair with mobile devices continued in Q1 2014, with four times as many smartphones and tablets as PCs shipped during the quarter. Smartphones now account for three quarters of mobile phone sales, and shipments of tablets exceed sales of PCs, though the latter improved during the quarter. The device mix for internet access is changing rapidly: more people now have a smartphone than have a laptop in the home, though the overall PC audience (including desktop) is still larger. For many people, smartphones are becoming the core device to get online, and almost half of all households have a tablet. Commercial revenues derived from mobile devices still trail their share of internet usage but the gap is closing: in Q1, smartphones and tablets generated a third of e-retail sales, while mobile ads represented a fifth of internet search and display advertising.

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    June 19, 2014

    Putting out Fires: Amazon’s phone

    Amazon has announced a new smartphone, the Fire Phone – a premium-priced device with some unique features and solid hardware; only available in the US at first, its high price and small number of apps limit its appeal. Although initial sales are likely to be low and mainly confined to Amazon Prime members, in the short term the purpose of Fire Phone is simple: to drive increased mobile sales of everything Amazon sells. In the longer term, Amazon needs to avoid being locked out of digital media purchasing on smartphones, increasingly the primary connected device – this is a first, although insufficient, step in that direction.

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    May 5, 2014

    Facebook extends its ecosystem

    At its f8 developer conference, under the slogan “Build, Grow, Monetise”, Facebook rolled out a slew of new policies and initiatives designed to boost its appeal amongst users, app developers and advertisers. In its drive to encourage developers to build more apps that support the social network, Facebook is attempting to position itself as a “cross-platform platform” with 1 billion+ users that sits on top of iOS, Android and other mobile operating systems. Key announcements included App Links, an open source solution enabling linking across apps, which may drive additional usage, and Facebook Audience Network, an app ad network rolling out this year, which should drive additional margin and could challenge Google AdSense.

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    April 27, 2014

    Facebook: mobile acceleration continues

    Facebook has successfully transitioned its business to mobile, with the number of mobile users now exceeding those on PC, and mobile newsfeed ads accounting for nearly all revenue growth and over half of total revenue, now on a $10 billion annual run-rate. North America and Europe continue to account for the vast majority of revenue and revenue growth, despite flat audience penetration in both regions, as increasing mobile consumption and advertiser take-up have driven sharp increases in ARPU, particularly in the US. Despite tougher comparables and declining desktop revenue going forward, the rapid ramp up in mobile ad revenue, plus initiatives such as video ads, ads on Instagram and planned mobile ad network, should deliver strong growth through 2014 and into 2015.