Digital Media

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  • July 18, 2009

    Google UK Q2 results: flatlining

    A last minute rescue proposition has postponed the threat of Setanta entering into administration by at least another week, subject to meeting its revised payment schedule of sums owing to the Premier League. The profound commercial difficulties experienced by Setanta highlight the weakness of EU efforts to ensure competition in the sale of live televised rights to top UK domestic football and underline the inflated rights costs that would face any other complementary premium pay-TV sports supplier. Setanta's survival hinges on its ability to negotiate further cuts in its rights payments and persuade investors that it can become profitable by making the necessary revisions to its retail/wholesale business model.

  • June 30, 2009

    UK Internet Trends

    Driven by growing broadband connectivity, the internet continues to gain share of media consumption and advertising at the expense of traditional media, hit by the double whammy of substitution to online and deepening recession. In the near-term, the recession will be the dominant factor across many business sectors. The enclosed presentation highlights key online trends in the UK and our current forecasts for internet advertising in 2009 and 2010.

  • May 25, 2009

    Will consumers pay for online news?

    Newspaper publishers are about to enter a series of ‘online payment' trials to help bolster disappointing online advertising performance that alone will be unable to support full scale newsrooms. Publishers are on the back foot, however: they have been giving away their content for free for almost a decade, and their core content does not have the unequivocal unique attributes of a football match, a movie or a pop song. While there are a variety of options for management to explore, in aggregate they will never match the print model, and so news is destined to shrink as a commercial enterprise for newspaper publishers.

  • April 25, 2009

    Google UK Q1 results: feeling the squeeze

    Google UK delivered solid performance in Q1, with gross revenues up about 8% YoY to £440 million; however, the huge growth of previous years has ended, due to a combination of recession and growing maturity in search. Key verticals (finance and travel) are being impacted by the downturn, but Google should continue to benefit from the secular shift of advertising to online and increasing advertiser focus on measureable ROI. We now estimate that Google's UK gross revenues will rise by 4% this year to £1.66 billion, supported by volume growth in search, with little contribution from display and mobile still firmly rooted in the experimental phase.

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    April 7, 2009

    Online classifieds: signs of recession

    Confirmation of robust UK online classified growth in 2008 from IAB/PwC should not be interpreted as ‘business as usual', with signs of severe turbulence emerging in the final months of the year for pro-cyclical activities like recruitment and property. Even online giants such as AutoTrader, Rightmove and Jobsite will be unable to offset the underlying collapse in their respective marketplaces in 2009, and we anticipate low levels of activity to persist into 2010 and potentially beyond. However, if the short-term prospects for online classifieds are less robust than many have assumed, the long-term consequences of the trends in classified will be devastating for local newspapers, with the shift in marketplace activities to national digital brands from the local press accelerating through the recession.

  • March 30, 2009

    Recession hits UK internet advertising

    IAB/PwC released figures for 2008 showing that annual spending on internet advertising rose 19.1% to £3.35 billion, accounting for close to 20% of total UK advertising, far higher than in any other major market. The recession started to bite in H2 2008. As budgets are cut, display has been hit harder than search and classified, as a rising share of inventory (almost 50%) is sold by ad networks for discounted CPMs or on a performance-basis. Our revised forecast for internet advertising is for zero growth in 2009, with a low single digit rise in paid search offset by falls in display and classified.

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    March 26, 2009

    Copyright owners and ad-supported digital content models: more tr [...]

    Highlighting the challenges of the ad-supported digital music model, SpiralFrog, the first licensed service to launch in the US, collapsed recently in a sea of red ink and failed promises. Newly licensed ‘cloud' jukeboxes like Spotify or We7 are struggling to make sense of the ad-supported model whose licensing costs far outweigh their potential revenue at present. Digital Britain's proposed Digital Rights Agency could improve the licensing environment for cloud jukeboxes, but we expect copyright owners will take particular care to avoid substitution of music consumption from pay-for to ‘free' (but ad-supported), unless the financial rewards are commensurate.

  • March 24, 2009

    UK behavioural targeting: Google raises the ante

    Google's announcement that it will offer ‘interest-based' advertising to key partners on YouTube and its AdSense publisher network from next month, with a wider rollout later this year, raises the ante for behavioural targeting. Targeting based on users' activity on publisher websites has become widespread, but concerns over privacy have slowed deployment of technologies that track users' entire click-stream activity on the internet, such as Phorm. Exponents believe that behavioural targeting will boost the market for internet display, which we estimate was worth £650 million in 2008. In our view, its main impact will be to accelerate the shift to performance-based pricing.

  • February 26, 2009

    On-demand music streaming from Spotify

    Project Canvas is the BBC/ITV/BT backed proposal for next generation Freeview and Freesat services that embraces IPTV reception, new EPG, home storage and HDTV applications. Setting up Canvas as a not-for-profit consortium and making it non-exclusive to content providers should avoid the competition issues which killed Kangaroo, but many questions remain and technical and regulatory delays could push back the launch to 2011. We do not expect Canvas to make a major difference to non-linear viewing of audiovisual content – its importance lies much more in future-proofing the ‘Free TV' viewing experience on the terrestrial and satellite platforms.

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    January 19, 2009

    Impact of the credit crisis on media industries

    Our current forecast of UK advertising revenues in 2009 is a decline of 12.2% across all the display media, led by a steep fall of 19% in newspapers, a result of the double whammy of the migration of classified advertising to the internet and the economic crisis. Visibility is poor for TV advertising spend beyond January and February, which we expect to be down 10-15%. Although the influence of the internet on TV has been less severe than on the press, our initial forecast for the full year is of a 10% decline, due to the recession and deflationary pressures. We expect internet advertising to continue growing through the recession, but at vastly lower levels – we project only 2.1% growth in 2009, a sharp deceleration from 20% in 2008, and growth will be driven entirely by search, as both online classified and display spend are falling as advertisers in key categories cut back.

  • October 28, 2008

    Nokia Comes With Music: one hit wonder?

    The Nokia Comes With Music (CWM) service bundles a music-centric handset with an unlimited music downloads service, allowing consumers to easily take advantage of their handsets' music functionality, and have no need for a separate iPod.

  • October 7, 2008

    UK Classified Advertising

    UK classified advertising, which generated £4.8 billion in 2007 (26% of total UK advertising spend), could decline to £4.2 billion in 2008 and to £3.7 billion in 2009. In our view, advertisers are accelerating their shift online as a result of the economic downturn, while the property market's steep decline depresses associated classifieds. Online has already overtaken national newspapers and magazines as classified advertising media, and looks set to rise above directories in 2008. In the near future, online will be the leading classified advertising medium, ahead of regional newspapers. The enclosed presentation updates for 2008 the information contained in Classified Advertising in the UK [2007-55].

  • September 20, 2008

    UK advertising: online reality check

    Deteriorating economic conditions are impacting growth in online advertising, with display and classified especially affected, though search, which accounts for about 60% of spend, remains relatively robust.

  • September 1, 2008

    Clear Channel – designs on global radio?

    Encouraged by the way that Google has come to dominate the global market for online search advertising, Clear Channel and its rival CBS Radio are now eyeing the potential to dominate the global market for online radio advertising, and fend off Google. In July 2008, Clear Channel announced its plans to dominate the ‘internet radio' market, by launching a ‘portal' offering a vast array of radio programming, along with a new business unit to sell online advertising inventory. Although Clear Channel's targets initially are US advertisers and US internet users, the company will likely target the UK market when it eventually decides to roll out its business model for online radio to the rest of the world. As a result, within the next decade, the UK commercial radio sector could face an additional source of competition from overseas media companies offering radio content delivered via the internet.

  • June 15, 2008

    UK advertising: internet to overtake TV this year

    We expect UK online advertising to reach £3.56 billion this year overtaking TV ad spend which we estimate will be £3.39 billion, making the internet the UK's largest single advertising medium, accounting for over 19% of total expenditure.

  • Ofcom
    Ofcom
    April 23, 2008

    Ofcom HD Ready to Go

    The Digital Dividend resulting from analogue switch-off and digital switchover (DSO) is shaping up into Ofcom's spectrum sale of the century. It comes at a time when the TV broadcasting industry is coming to see the progress from standard definition (SD) to high definition (HD) as fundamental a step change in broadcast picture quality as was many years ago the shift from black and white into colour. This report examines the Ofcom proposals, the financial costs to the commercial PSBs and the implications of Sky's Picnic proposals for the successful achievement of Ofcom's plan.

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    March 4, 2008

    Web TV: much hoopla, little moola

    Early figures from the BBC show promising take-up of iPlayer, its web TV application to deliver BBC TV shows. More than 2 million people watched an average of just over one show per week in January, representing about 1.6% of TV viewing amongst iPlayer users.

  • February 15, 2008

    Yahoo!: acquisition by Microsoft most probable outcome

    Microsoft's $44.6 billion offer for Yahoo! represents the software giant's last opportunity to compete with Google in the rapidly growing market for online advertising, which is forecast to double to $80 billion within three years.

  • YELL
    YELL
    February 13, 2008

    Yell shortfall shines spotlight on local advertising

    Yell announced this week that full year sales growth (to March 2008) in its UK operations would be 2%, sharply down from the previously forecast 3%, due to “toughening market conditions” since the start of 2008.

  • January 17, 2008

    Will Google buy Yell?

    Rumours that Google was acquiring Yell emerged at the end of last week, but we doubt the search giant would be interested in purchasing a traditional media company, particularly not one predominantly in print.

  • December 20, 2007

    UK DTV Homes Platform Forecasts: 2003-2017

    Just as digital switchover (DSO) has finally begun, TV broadband convergence is beginning to make its mark in the UK following the launch of hybrid broadcast reception and IPTV services over DSL. In this context, UK DTV Homes Platform Forecasts: 2003-2017 updates our long-term DTV platform homes forecasts from 2006 (UK DTV Platform Growth [2006-40]), covering the digital satellite (DST), cable (DCT) and terrestrial (DTT) platforms.

  • October 30, 2007

    Apple Q4 FY2007 results: can the iPod shine over Apple’s Ch [...]

    School's back and strong computer sales drove Apple's Q4 FY2007 revenue to $6.22 billion, up 28.5% year-on-year.

  • September 9, 2007

    Apple’s iPods: reaching maturity?

    Apple revealed an updated iPod range to stimulate demand in the run up to the all important Christmas quarter, when iPod revenues typically account for 50% of Apple's totals.

  • August 13, 2007

    C4 and Digital Diversification

    Channel 4's digital diversification strategy is a topic we first considered in 2002. At that time, we urged Channel 4 to husband its resources to meet its public service remit and maintain audiences on its terrestrial service, rather than diversify into new digital satellite channels. If anything, the progress of time has reinforced our conclusion that Channel 4's digital diversification strategy is risky. The risks for Channel 4 are greater than for the BBC, since Channel 4's public service remit is funded by advertising alone.