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  • Digital AdEx Market Outlook – the hunter becomes the hunted
    Digital AdEx Market Outlook – the hunter becomes the hunted
    December 1, 2015

    UK Digital Upfronts 2015: going mobile

    This year marked the second annual IABUK Digital Upfronts. As well as Facebook, Google/YouTube, Aol, Yahoo!, Twitter, BuzzFeed, Vice and others, several traditional media companies – Sky, The Guardian and Global Radio – participated, reflecting the rising importance of digital media and digital media buyers to their businesses. Many of the pitches were informed by the key shifts in online content: it is increasingly cross platform, driven by mobile devices and focused on video programming, and these formed the main themes of the event. A key piece of context is the rise of social media and the shift to programmatic buying, which continue to driven down pricing for all but the most valuable inventory – audience scale, high value audiences and premium content have never been more essential.

  • November 27, 2015

    US entertainment groups and consolidation

    US entertainment groups have enjoyed strong revenue growth thanks to pay-TV, subscription video-on-demand and international sales, despite headwinds on the advertising market and downward pressures on retail pay-TV prices. Media merger and acquisitions have mainly failed, but strengthening the hand of the content producers in relation to distribution channels remains relevant and arguably even more important due to the sheer financial and audience size of digital operators, although the studios' pricing power remains unchallenged. 21st Century Fox could then justify a new bid for Time Warner, although it will struggle to address TW's objections to the previous offer without taking on a huge pile of debt.

  • November 23, 2015

    YouTube Kids app lands in the UK

    The YouTube Kids app aimed at young children hands parents more control of the increasingly popular YouTube experience. Ads served to kids on the app will observe similar rules to those on broadcast TV, easily circumvented on YouTube by commercial video programming. The app will directly compete with the popular ad-free CBeebies iPlayer channel, TV channels and Netflix.

  • AdEx Market Outlook – market growth underpinned by Digital
    AdEx Market Outlook – market growth underpinned by Digital
    November 23, 2015

    AdEx Market Outlook – market growth underpinned by Digital

    We expect total AdEx to grow at a 2% CAGR to A$14.9b in FY20. While below the long term growth rate (3-4% CAGR) this is above the recent trend (-1% CAGR FY12-15). We expect the continued migration of AdEx from Print to Digital with the latter showing signs of maturing while TV sees anaemic growth (but growth nonetheless).

  • November 20, 2015

    Retransmission fees: a Pandora’s box

    The government is expected to announce a Digital Bill in Q1 2016 that will propose profound changes to the structure and funding of the public service broadcasters (PSBs) in television, one of its aims being to enable them to extract retransmission fees from pay-TV platforms, valued at £200 million a year or more for the commercial PSBs. So far the government has only committed itself in its March 2015 consultation paper to the repeal of Section 73 of the Copyright, Designs and Patent Act (CDPA 1988), which in isolation will adversely impact only the Virgin Media cable platform. Now its ambitions appear to go far beyond introducing retransmission fees towards dismantling the entire UK PSB TV regulatory infrastructure of privileges and obligations and paving the way towards vacation of the DTT spectrum.

  • November 12, 2015

    Activision: the new King of the games industry

    Activision’s announcement of its intention to buy King, the maker of Candy Crush, for $5.9 billion, is a major strategic play but positions the company well as it seeks to broaden its exposure to the growing mobile games market. Activision has answered the “build or buy” question by looking to King to strengthen its capabilities in key areas: specifically mobile development, online gameplay, customer acquisition and retention analytics, as well expanding its range of revenue streams. Other mobile and online game developers are now under renewed focus as possible acquisition targets by major developers. Enders expects more acquisitions in this space in the near term.

  • November 12, 2015

    In the League of Champions: Virgin Media Q3 2015 results

    Virgin Media had its strongest quarter for three years in broadband net adds market share – a robust performance in a competitive environment and very much in line with recent strong performances at both Sky and BT. Group revenue growth improved 1ppt, or 3ppts adjusting for distortions, driven by accelerating growth in all operating divisions although higher content and hardware input costs offset the benefit to margins. The Project Lightning network expansion program continues, targeting 250k new premises by the end of 2015, with a discernible impact to subscriber and revenue growth likely to be apparent from the start of 2016.

  • November 11, 2015

    Trinity Mirror buys scale with Local World

    By fully acquiring Local World, Trinity Mirror has bought scale advantage in the local media marketplace, and accelerated a much needed growth story for digital assets. The medium term outlook for local media continues to look stormy, underlining the importance of investment in technology and new platforms for publishing, journalism and marketing, essential for longer term sustainability. Consolidation is needed to drive a more cost-effective investment phase as the transition to digital continues apace, provided the competition authorities do not interfere.
  • November 9, 2015

    Apple’s iPhone advantage

    Apple’s results underlined its status as the tech industry’s biggest and most profitable company due to the iPhone, accounting for two thirds of the company’s revenue and capturing three quarters of all smartphone profits. While the iPhone dominates the $500+ handset market, the question is how will this segment develop as smartphone penetration approaches maturity in developed markets and mobile operators restructure handset subsidies. The shift to separate airtime and device plans could increase consumer price sensitivity, but leasing plans with annual replacement, supported by the iPhone’s strong second hand value, bring the opportunity of faster replacement cycles, with upside and downside risks matched.

  • November 6, 2015

    YouTube Red: Google’s original bid for premium content

    At launch, Google’s new subscription service YouTube Red competes most directly with premium music streaming services, also offering ad-free videos. YouTube’s augmented revenue model re-boots incentives for native talent to produce content for the platform, and will also widen its appeal for established content producers. Although consumers are likely to find paid subscription for ad-free videos a weak proposition, Red holds much potential for YouTube as it competes for attention across device ecosystems, and presents little risk to its existing advertising model.

  • November 5, 2015

    BT Q2 2015/16 results: Sport distorts, but underlying results str [...]

    The launch of BT Sport Europe pushed up BT’s revenue and pushed down EBITDA in its Q2 results, but underlying revenue growth was strong across all divisions and cost control continued, with the company well on track for its full year guidance. BT Sport itself is being executed well, both in terms of viewers and direct revenue earned, but is not having a discernable impact on broadband figures, nor a game-changing impact on BT’s modest pay TV base, despite its very considerable net cost. On the regulatory side, BT has secured a strong result with the EE merger being provisionally approved without remedies, but debates over the future of Openreach continue, with the related issue of ultrafast roll-out regulation of particular import.

  • November 4, 2015

    Watching TV and video in 2025

    Television has seen massive change and it has held up remarkably well since the era of satellite and cable dawned in the US in the mid-seventies; but now there is a sense of transformation in the air as broadcast TV gives ground to limitless video on multiple screens. Viewing habits are changing very rapidly indeed among the under-35s due to a combination of cohort and life stage factors, although we are also seeing change among older age groups. In spite of all the change that is now taking place, our latest long term forecasts point to the broadcast sector as continuing to account for the greater share of viewing for many years to come absent government intervention, which cannot be ruled out.

  • The Internet of All Things - Towards the Hyper-connected World
    The Internet of All Things - Towards the Hyper-connected World
    October 29, 2015

    UK consumer perspective on Internet of Things

    The UK is a prime market for sales to consumers of IoT products with obvious and compelling use cases: wearables surf perennial social trends such as fitness and diet, while smart home solutions address energy use, safety and security. British Gas’ Active Hive Heating, first to market and the top smart thermostat brand in the UK, is facing competition from the Nest Learning Thermostat from Nest Labs, while Samsung’s SmartThings provides safety and security in the home. A substantial barrier to sales of IoT products to consumers lies in their concerns regarding the privacy and security of the personal data collected online. This data should be safe under the UK’s data protection regime, although well-publicised hacks highlight compliance issues on the part of data controllers.

  • October 29, 2015

    BT’s away game

    BARB viewing figures provide an encouraging start to BT in its first season showing Champions League and European televised rights; numbers are on a par with those achieved by Sky over the previous few seasons. The investment in rights is not just about achieving good viewing figures - BT’s entry into televised sports is as much about supporting its broadband and pay-TV business in the face of increasing competition from Sky and others. BT has reported results for the September quarter with record-setting TV net adds and steady broadband net adds, confirming that while Sky arguably won the broadband battle, BT won TV, and neither really lost in either category.

  • October 27, 2015

    Sky Q1 2016 results: positive start to the year

    Sky has got off to a good start in 2016, as Q1 group revenues grew by 6% and operating profits by 10% year-on-year, while churn stayed low across all three operations, and product net additions of close to one million pointed to continuing strong underlying growth. The Q1 results have softened concerns about the impact of loss of Champions League live televised rights in the UK and Italy, which have so far shown very little effect in spite of intense competitive pressures from BT and Mediaset. Although Sky UK & Ireland has accounted for the entire year-on-year increase in Q1 operating profits, strong subscriber growth in Germany & Austria over the last two years, and signs that economic conditions in Italy are on the mend, provide a positive outlook for the year ahead.

  • October 26, 2015

    ITV acquires UTV TV – where next?

    The launch of UTV Ireland in the Republic has proved less than successful for UTV Media and has led to its divestment and that of its Channel 3 licence in Northern Ireland. ITV has bought UTV Television for £100m cash and will own 13 of the 15 regional Channel 3 licences, though we do not see a play for STV in the medium term. UTV Media is now able to fully focus on its main profit centre – its growing radio business in the UK and Ireland.

  • October 14, 2015

    BBC plans hit local press

    Non-subscribers can download this report in full - alongside all our other coverage of the BBC during the Charter Review process - from the 'BBC Charter Review' page of our site. BBC proposals for local media set out on 7 September offer solutions to an alleged market failure, without much evidence, contained in February’s Future of News report. There is no dispute that local commercial print and online media operations have suffered heavy revenue losses since their peak a decade ago – the industry is, however, still profitable, innovation and online growth are helping to stabilise the top-line, and new enterprises are emerging. Local media publishers prefer a turbo-charged BBC policy of linking to their sites to the proposal for a local media digital hub fed by publishers and 100 BBC journalists.

  • October 12, 2015

    Music publishing in Germany 2014-17

    Germany remains the second largest market in Europe for the exploitation of composition rights by their authors, with €382 million paid out to them in 2014, up 8% on 2013 (63% share of distributions on average). The German Government intends to secure an even “better balance for authors” in their contracts with music publishers, by allowing the composer to “re-tender” their contracts after five years to secure a better deal. GEMA, the collecting society, has a strong position in Germany and is poised to lead the development of the digital single market for online music services. Together with PRS for Music (UK) and STIM (Sweden), GEMA has formed a joint venture (JV) to offer multi-territory licensing and copyright administration services to services, music publishers and other CMOs, cleared by the EU Commission. Music publisher revenues from domestic collections could rise from €225 million to €247 million from 2014 to 2017, due to a moderate rise in broadcast revenues on the back of the economic recovery, a boost to public performance revenues from a higher live music tariff and flat royalties from recorded music expenditure, as the decline of physical mechanicals is offset by the rise of online royalties.

  • October 9, 2015

    Sky’s cost discipline in Italy close to being vindicated

    In Italy, pay coverage of the Champions League shifted from Sky to Mediaset Premium this season. Alongside a new Serie A contract, this adds an extra €300 million to Mediaset Premium’s cost base. The first results indicate that Mediaset is unlikely to meet its subscriber growth target. On current trends we expect cumulative EBIT losses of over €400 million by 2018. Mounting losses may force Mediaset to close or sell Premium, but fear of Sky may slow decision-making. Sky was probably right not to overbid for the Champions League and the savings should more than offset minor subscriber losses.

  • October 8, 2015

    Friends with benefits: Facebook and publishers

    We are seeing a proliferation of news distribution services on social media and technology platforms, as companies like Apple and Facebook look to capture the value of longform professional content. Facebook’s Instant articles will likely be the most significant distribution mechanism for publishers, allowing Facebook to further position itself as a provider of quality, rather than just user-generated, content. This is best seen as a trade: news providers’ engaging content for Facebook’s audience reach and data. While concerns about reliance on Facebook and content commoditisation are understandable, these are the inevitable results of user behaviour.

  • October 6, 2015

    Sky Deutschland: approaching profitability?

    The push for accelerated subscriber acquisition has stalled Sky Deutschland’s underlying growth in profits as promotions have undermined ARPU. After being artificially suppressed by the introduction of two-year contracts, churn is poised to rise. Sky could maintain subscriber growth only through increased marketing and discounting – but this is unlikely. We expect EBIT breakeven before the end of the current Bundesliga contract in 2017. But sustained profitability depends on the outcome of the rights auction to be held next spring.
  • October 5, 2015

    Amazon’s Prime Directive

    Despite dropping the Fire Phone, Amazon has upped the ante in its battle for digital media consumers, upgrading its Fire TV devices and rolling out a new range of low price and robust tablets, starting from £50/$50, squarely aimed at the mass market. As with all Amazon devices aside from the failed phone, they are conduits for the company’s media and retail services, aimed at increasing purchases and forcing other platform operators to include them. Although shrinking as a share of Amazon’s business, media remains crucial, both for direct revenue and to attract customers to Prime, its membership programme, which by some estimates now accounts for the majority of its US sales.

  • October 1, 2015

    PSB at risk in the world

    Australia’s ABC and Canada’s CBC/Radio Canada have each suffered severe budget cuts imposed by governments without public or political debate and in spite of strong audience support. These cuts have impaired the international reach of ABC and CBC, as well as their investment in news and locally originated content. The UK’s reputation and standing in the world relies on the BBC’s services, its online presence, channels and its programming sales. And, just as in Canada and Australia, this valuable national soft power is and will be diminished by current government policy.

  • September 16, 2015

    BBC TV airwaves beyond 2026?

    The DCMS Green Paper on Charter Renewal does not mention the DTT spectrum, but the question of its future is never far away, in particular where it refers to the recent explosion of choice and poses questions about universality. The former 470-862 MHz band reserved for broadcast TV will already have shrunk to 470-694 MHz by 2022 following intense international pressure from the mobile sector. Absent a strong defence case, we cannot rule out total clearance from the mid-twenties. As things stand, replacement of the DTT spectrum by the internet will have devastating consequences for the entire TV broadcast ecosystem. Most importantly, examination of viewing trends leads us to conclude that the UK public will not be ready for at least another 20 years.