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  • February 10, 2016

    Vodafone Q3 2015/16 results: Almost stable

    Vodafone Europe’s service revenue growth continued its trend of gradual improvement, helped by solid contract net adds and sustained high data traffic growth, and is now almost stable. Project Spring network metrics performed strongly in the quarter, and there is some evidence of this translating into better operating performance in Italy, which enjoyed positive mobile service revenue growth for the first time since 2010. Problems remain for the company in its other key mobile markets however, all of which remain in decline. Although these issues may prove temporary, and Project Spring may yet offer them a boost, further pressure is on the horizon due to competitor consolidation and associated regulatory remedies.
  • February 4, 2016

    Sky Q2 2016 results: innovation, service and bonding

    Europe’s biggest pay-TV service provider Sky has delivered another strong quarter, which saw H1 adjusted operating profits across the group rise by 12% year-on-year on a like for like basis at a constant Euro exchange rate, and the upward trend clearly has a lot of mileage left in it. Although Sky UK & Ireland now generates almost all the current operating profits, the performances of Sky Germany & Austria and Sky Italy give cause for optimism and testify to the group’s deep commitment to top of the class innovation and customer service. In a converging online, telco and TV space, the appointment of James Murdoch as non-executive Chairman and entry of Showtime into the Sky Atlantic partnership of Sky and HBO send out a clear message from the TV side about the importance of global scale and ties between its members.

  • February 1, 2016

    China OTT and SVOD

    China holds tremendous appeal to studios and OTT video services, boasting an audience of 460 million online video users in mid-2015 (69% of internet users), which could exceed 900 million by 2020 by our estimate.

    China’s OTT video marketplace generated estimated revenues of $5 billion in 2015, of which two-thirds was due to ad-supported streaming and the rest to paid video streaming.

    Netflix recently pledged to enter China, although the current regulatory environment presents substantial, perhaps insurmountable, challenges to a direct-to-consumer offering

  • January 29, 2016

    Google’s exaggerated mobile trouble

    Rumoured details of Google’s traffic acquisition deal with Apple and also the size of its Android revenue have prompted many to doubt the search giant’s prospects on mobile.

    Compared to previous analyst estimates and in view of Google’s traffic cost structure, we see the reported figures as positively rather than negatively surprising.

    Since the mobile economy is still developing around the world, it is in our view misguided to evaluate the success of Android in revenue terms alone, since the OS responds to Google’s broader strategic aims.

  • January 15, 2016

    Will the young of today ever turn to trad TV?

    The steep year-on-year decline in TV viewing among younger age groups has continued in 2015, with reported TV viewing by children 4-15 and adults 16-24 approaching 30% down on the peak of 2010. The downward trends notwithstanding, there are good grounds for believing that some of the new media consumption behaviours will fall away as today’s millennials move-up the lifestage ladder. In addition, half-yearly comparisons reveal a big slow-down in the rate of decline during H2 2015, suggesting that the explosive impact of smartphones, tablets, apps and social networks has almost reached its limits, while further change will occur at a much slower pace.

  • January 5, 2016

    Channel 4 market impact

    Channel 4 is a key pillar of the UK’s audio-visual economy. Its unique commissioning model fosters a hotbed of new creative UK talent, an ecosystem of independent producers, many micro. Channel 4 commissions a greater share of its budget than any other broadcaster, public or private, also fostering the creative economy outside the M25, and 9% of commissions will be to the Nations by 2020. The future success of the stand-alone independent production companies is not in the hands of ITV and Channel 5, but of Channel 4 and the BBC – the pure PSBs.

  • December 18, 2015

    Pandora’s 2016 music royalties to rise 12%

    The Copyright Royalty Board (CRB) delivered its Web IV ruling on statutory SoundExchange licensing rates for webcasters for 2016-20, raising Pandora’s total music royalty costs by a forecast 12% in 2016. Had the CRB sided with SoundExchange, rates for Pandora’s non-subscription tier would have shot up 79%, leaving the company floundering in a sea of red ink. Nevertheless, these increased licensing costs for Pandora over 2016-20 will postpone the moment when the company attains net profitability.

  • December 18, 2015

    Channel 4: sustainability and privatisation

    The newly elected Conservative government is exploring all the options for privatising Channel 4, but faces a complex legislative pathway. The privatisation case would be made easier if the current model were unsustainable. Only, Channel 4 is delivering its remit with great success, is commercially sustainable, and promises both to remain highly sustainable and grow its PSB contribution through its current licence ending in 2024. Channel 4 privatisation offers small returns to the Treasury as long as the remit, IP ownership restrictions and ban on vertical integration remain in place.

  • December 17, 2015

    Property marketing outlook: Rightmove tightens its grip

    This is the second of our three reports in our annual review of vertical marketplaces (classifieds), focused on property, and follows Vertical marketplaces overview and recruitment outlook [2015-115]. Zoopla Property Group (ZPG) has been hit by new entrant OnTheMarket, and has diversified its publishing and revenue models. But OnTheMarket is a red herring in the marketplace, delivering the same charging model more expensively for estate agents than leading portals Rightmove and ZPG. Property marketing expenditure has been resilient this year, and we expect it to be roughly flat (a little down in real terms) over the next two to three years, largely a result of the print-to-digital transition depressing spend, but also because estate agents are feeling squeezed. Local newspaper print decline will roughly offset increases at the property portals and elsewhere, though print spend at the top of the market – brands such as Country Life, the FT and the Telegraph – remains robust, despite deep declining volumes of £1.5m homes.
  • December 16, 2015

    Vertical marketplaces overview and recruitment category outlook

    The recruitment market is buoyant (up 10%), so portals, specialists and intermediaries are generally doing well, while local newspapers have lost some market share. Linkedin (professional social media, which has diversified into skills and training) and Indeed (freemium jobs aggregator, which provides performance charging and will introduce new services in 2016) are the key influences in the marketplace, and both are growing very strongly. The value chain in recruitment is being slowly restructured. Recruiter demand for highly skilled, specialist candidates does not have the labour supply to support it, sustaining marketing expenditure, though print spend continues to decline.

  • December 11, 2015

    Canal+: things will get worse before they get better

    Booming sales in Africa offset the steady decline of the Canal+/CanalSat subscriber base in France, delivering low but positive group revenue growth. Canal+’s management, now firmly under Vincent Bolloré’s control, is committed to reversing the French decline by investing €2 billion in new set top boxes and content – but production of original series is hampered by corporatist regulation and the market for sports rights is increasingly competitive. Earnings are slipping – under a high fixed cost model any revenue decline depresses profit margin. The trend will worsen under the weight of the increase in domestic football costs next year as well as the planned extra spend on content and set-top boxes.

  • December 9, 2015

    UKTV – From pay to free?

    UKTV has continued its strong audience performance throughout 2015, and with Dave and Drama the company now has the two largest channels outside the PSBs. Growth has been driven by the effective use of the DTT platform with UKTV positioning its DTT channels to take advantage of the platform’s audience profile and sheer volume of viewing. Assuming UKTV maintains its commissioning spend we expect continued growth on free-to-air, but question marks remain on some of its more niche pay-TV channels.

  • December 8, 2015

    Mobile-first, mobile-foremost Smartphones to be 50% of online con [...]

    Smartphones will deliver half of all time spent online in 2016, and online time on smartphones will grow a further 50% by 2020. They are increasingly replacing the TV’s role as the primary provider of video content. There are stark differences in habits by age: young people’s smartphone use is highly substitutional for other media. Older people, who will account for most of the growth in time online, will add it on top of the time they already spend with other media, particularly TV. The implications of an increasingly mobile-only world are wide-ranging: social discovery and the mobile form factor change what works in content, while in-feed, branded content, payments and subscription are attractive alternatives to display and search advertising on mobile.

  • December 2, 2015

    Millennials: the mobile generation

    Millennials are not the multimedia generation, as is often asserted, but the first entirely digital generation, and this is best reflected in their obsessive use of smartphones. The importance of mobile is not just as a communication device, because the smartphone has become an all-important tool, which this generation relies on for a much wider range of activities than older demographics. The implications for traditional consumer media are that smartphone distribution and discovery are the key strategic issues for the foreseeable future.

  • 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.