Mobile

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  • July 28, 2017

    Mobile Telco Market Outlook

    A mature mobile market with steady growth driven by a rising population is on the cusp of change with both innovation (5G) and disruption (TPG) just around the corner.

  • July 26, 2017

    TalkTalk Group Q1 2017/18 results: Still growing the base

    TalkTalk sustained positive broadband net adds in the June quarter, adding 20k to its base, largely driven by reduced churn, which was largely driven by re-contracting a large proportion of existing customers onto its new cheaper bundles. Unfortunately, this had a negative effect on revenue growth, with Group revenue growth (ex-carrier) dropping to -3.2%, as the new cheaper bundle adoption diluted ARPU, but the company remains confident that revenue growth will turn positive for the full financial year as the ARPU dilution effect annualises out. The company recently announced a price rise due in August of around 5-6% for customers not on its new cheaper bundles (around 38% of its total broadband base), which will help with the ARPU turnaround, but may make maintaining positive broadband net adds more challenging
  • July 12, 2017

    Cometh the hour for the commercial PSBs

    The first half of 2017 has seen the announced departure of three CEOs from the commercial PSBs within the space of less than two months: David Abraham of Channel 4 (14th March), Rob Woodward of STV (25th April) and lastly Adam Crozier of ITV (3rd May). Responding to the challenges of digital switchover and the advertising recession of 2008/09, as well as their own specific company issues, one of the first tasks for all three CEOs has been to raise staff morale. The last seven to ten years may have been taxing at times. The next seven to ten promise to be no easier, and may yet be harder, as the successor CEOs chart their way through the continuing transformation of the UK digital landscape

  • July 10, 2017

    Tinder and online dating: who’s paying?

    Tinder is one of the most high-profile mobile apps on the market and has transformed the adoption of online dating.Tinder’s success is due in large part to its understanding of user experience, which is key to getting, keeping and upselling users through network effects.But the financial value of this success is limited by the industry: even a mobile revolution has not created a high- revenue mass market where none existed before

  • June 29, 2017

    European mobile in Q1 2017: Stuck at zero

    European mobile service revenue growth remained stuck at zero in Q1, with a heightened impact from the mobile termination rate cuts in Germany and price promotional activity in southern Europe mitigating improving markets in the UK and France.‘More-for-more’ price rises continued both during the quarter and after, and appear to be more widespread than the 2016 increases. This should be driving revenue growth at a healthier rate than zero, and may well do as out-of-bundle revenue declines fade away in significance and regulated MTR and roaming cuts annualise out. The regulatory impact should improve next quarter, as the UK MTR impact drops, Germany at least gets no worse, and the roaming impact has a lull prior to the ‘free roaming’ mandate taking effect towards the end of the quarter. From Q3, however, the ‘free roaming’ effect will be in full force, and will negatively impact operators in northern European and smaller European countries in particular

  • June 29, 2017

    The map is now the territory

    We are in the midst of a rapid change in how maps are made and used, from a world of cartographers making records of physical features to sell to consumers and businesses, to one where information about the world is automatically tracked and measured, and built into every service we use. A whole host of industries traditionally unconcerned with geography are being and will be transformed by maps and location, from retail and advertising to finance and insurance. Every business needs to know what maps can offer them. A variety of maps suppliers are jostling for position in serving this growing need: local or international, free or commercial, seeing mapping as a core or side-business. Different suppliers suit different requirements.

  • June 27, 2017

    UK broadband, telephony and pay TV trends Q1 2017: Profit warning [...]

    UK residential communications market revenue growth dipped modestly to 2.7% in Q1, from 3.3% in the previous quarter. This was mainly driven by ARPU weakness arising due to the timings of Sky and Virgin Media’s price rises, but weakness also stemmed from the sustained decline in broadband volume growth and continued new customer price competition.Looking forward, the implementation of an overlapping price increase from BT, as well as Sky’s price increases coming into full effect, should boost market revenues by around 1ppt in Q2 2017, but this will drop away again by Q3. The churn fallout from the communication of these price increases should also dissipate in Q2, benefiting BT and Sky competitively, and making it challenging for TalkTalk to repeat the feat of recovering to positive retail broadband net adds

  • June 23, 2017

    UK mobile market Q1 2017: EE leads the way

    UK mobile service revenue growth continued to improve, with reported growth reaching 0.4%. The rate of improvement has, however, started to slow. Pricing remains solid and data traffic continues to grow healthily.Looking forward, there will be some rare regulatory relief from next quarter, as the regulated MTR cuts drop to de minimis levels, helping service revenue growth by about 0.5ppts, and there is a brief respite from the impact of regulated EU roaming cuts before the full effect of their abolition on 15 June. Q3 will not be so comfortable, with the EU roaming abolition taking full effect during the main holiday season.
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  • June 23, 2017

    How to sell games: borrowing ideas from Netflix and Apple

    A Netflix-like subscription model for console based video gaming is a big step closer with Microsoft launching a clear and easy Xbox subscription game solution, and it may even work. Sony’s strategy for premium online services across all its businesses remains muddled and complicated, but could be fixed quickly: dropping game streaming is the first step, providing a lower cost subscription service is the second. Google’s admission that more curation in its games app store will be needed finally indicates a better understanding of the games industry, in parallel with the company’s efforts to win over other creative industries

  • June 10, 2017

    BT Q4 2016/17 results: Mobile strength, pressure elsewhere

    BT had a reasonable quarter in its consumer broadband business given market pressures, and a very strong one at EE with continued growth acceleration. It had a good quarter for fibre adoption as well, helping its wholesale divisions stabilise their revenue, but business/IT was weak as expected.Regulatory pressure remains intense despite the (welcome) Openreach agreement, with price cap regulation proposed or due on a range of products, and a regulatory approach which is far from investment-orientated. Pressures in the business/IT market are likely to continue, and pressures in the consumer broadband market are likely to intensify, justifying BT’s current cautious approach to guidance and dividends.

  • June 9, 2017

    UK General Election online: news and advertising

    In contrast to print coverage, most shared news and opinion content on social media was decidedly pro-Labour this election season, with fake news relatively non-existent compared to the US election in November. Facebook’s role in news distribution has steadily grown and now rivals Google’s, but only a half of the UK’s electorate are active users – for the platform to become decisive in political news would require much stronger turnout among young voters. Facebook was the chief digital ad platform for both main parties, with Conservatives targeting Labour seats, Labour defending them and both adopting a negative tone.

  • June 8, 2017

    Nintendo Switching to a new console era

    The successful launch of the Nintendo Switch creates a new console model, and demonstrates the staying power and long term value of great franchises. Microsoft reveals the specification for Scorpio, but it won’t be enough to catch up to Sony. New franchises, and probably new leadership, will be the key to stopping Xbox sliding into irrelevance outside North America. Sony’s PlayStation 4 now exceeds 60m units worldwide, allowing Sony more freedom to publish a wide range of challenging creative console games, while VR games continue to gain momentum.

  • May 19, 2017

    Virgin Media Q1 2017 results: Roll-out and competitive pressures

    Virgin Media has run into network roll-out difficulties, having to revise down its previously stated homes passed figures and not committing to a full year 2017 target, with the current build run rate well below that required to hit its medium-term targets. Operating results were a little mixed, with ARPU showing signs of continued discounting and market-wide competitive pressures, and churn was higher than the previous year, but net adds were strong, RGUs stronger, and UK consumer cable revenue growth is still over 4%. Slower Project Lightning roll-out and weaker ARPU growth points to slower revenue growth during 2017 than might otherwise have been expected, but Virgin Media still has relatively strong prospects in a toughening market .
  • May 3, 2017

    People, not devices: Audience buying in a cross-device world

    Cross-device identity profiles are used to stitch together fragmenting online ad audiences, but also to enable new links between advertising and marketing, across European markets. This moves value from media itself to understanding each consumer and how they access content and services on proliferating connected devices. By 2020 we predict that 58% of all UK online ad buys by value will make use of high-quality audience IDs, led by the largest advertising platforms but limited by privacy regulation and cost.
  • March 7, 2017

    Mobile World Congress: a look at tech & media

    Smartphone hardware did not take centre stage at the year’s premier mobile industry event in Barcelona, with license-built Nokias generating as much excitement as flagship smartphones from HTC, Sony and Samsung. In VR, AR and IoT, the most impressive signs of progress were under the hood rather than in flashy device announcements – as the actual use cases become more specific, so does hardware and software. Concrete business applications around the personal data generated by connected mobile devices was a major theme, with new types of automation and personalisation in services and media – and a growing market for security.

  • February 28, 2017

    Fashion’s new look: digital sets new trends

    Fashion underpins the growth of ecommerce; online took a 14% share of all fashion retail in the UK last year and is set to rise further, challenging the economics of physical retail. Mobile is a key driver, it is changing research and shopping habits, and in turn affecting supplier product cycles, merchandising and marketing strategies. Social media has disrupted the traditional shopping funnel, changing how trends and styles proliferate and shifting the sites of authority and influence in a £66 billion sector.
  • February 27, 2017

    Amazon’s ad business: shoppers for sale

    Amazon’s marketing services bring in a growing stream of direct, high-margin revenue, but their main role is still in supporting vendor partnerships. Amazon uses customer profile data to profit from its own media and that of others, illustrating the value of a direct customer relationship in online advertising. In the future, Amazon’s moves into video content and voice interfaces are likely to significantly expand ad inventory, but maintaining the trust of shoppers is not straightforward.

  • February 9, 2017

    Vodafone Q3 2016/17 results: Modest slowdown

    Vodafone Europe’s mobile service revenue growth worsened to -0.6% from -0.2% in the previous quarter, the first deterioration following at least nine quarters of consecutive improvement, with the UK particularly weak. The company could nonetheless grow profits handsomely if revenue growth stabilises at this level, with more clarity on the medium term prospects for this likely to come with next quarter’s results and guidance for 2017/18. Our main concern continues to be the company’s declining subscriber share, particularly in consolidating markets where its historic advantages of having high market share may be rapidly eroded.

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  • February 7, 2017

    TalkTalk Group Q3 2016/17 results: Weak quarter, reassuring guida [...]

    TalkTalk had a weak quarter, as was pre-warned, with the decline in the broadband base accelerating and consumer revenue growth of -6% slightly worse than the previous quarter. Guidance was however very bullish, with the company confident that it can bounce back to return to positive net adds in the March quarter, while still hitting its profitability guidance. This looks a difficult task in a market which is still highly competitive, but if it can achieve it, the longer term aim of a stable customer base and growing revenue and profits looks much more plausible.
  • February 1, 2017

    BT Q3 2016/17 results: Strong core, let down elsewhere

    BT had a solid enough quarter, with revenue and EBITDA growth dipping due to pre-warned temporary factors, consumer continuing to outgrow business, and very solid operating trends evident, especially in high speed broadband and mobile. This has of course been entirely overshadowed by the profit warning, with prospective weaknesses in UK public sector and international corporate of far more concern than the contained, albeit surprising, accounting irregularities in Italy. BT has a large share of revenue and a much smaller share of profit from corporate/government data network/IT services, which are erratic in nature and arguably in long term decline in their current form, and without major changes they will continue to be so.

  • January 13, 2017

    Music subscription streaming 2017

    Streaming is now mainstream and we predict 113% growth in expenditure on subscriptions for 2015-18 in the top four markets (US, UK, Germany and France).

    Free vs paid-for streaming is the central question for the music ecosystem: free yields fractions of pennies, making subscription the only credible business model.

    Market leader Spotify is facing competition from tech giants Amazon, Apple and Google, with deep pockets, for whom content is a pawn in a larger game.

  • December 13, 2016

    Internet Trends – Consumer behaviours driving market trends

    As smartphone ownership nears saturation in almost all consumer groups, the base for the UK digital economy is widening: media consumption continues to move to connected devices and use of consumer services on mobile grows. Ecommerce is now responsible for 75% of retail growth, steady even during periods of decline for the overall market. Google and Facebook take up almost 90% of gross online advertising growth this year, and the ecommerce and mobile service markets show early signs of platform concentration.
  • November 30, 2016

    UK digital ad forecast 2016-2018

    The UK digital ad market has been resilient in the immediate aftermath of the Brexit vote, and set to reach £10 billion in annual value by early next year. Growth is likely to remain strong even in the face of a possible economic slowdown next year, thanks to continuing growth of ecommerce and online media consumption. We expect media budgets to come under pressure, and this could be to the advantage of digital, which often provides better attribution of short term return on investment; we could see a “flight to attributability”. Within digital, growth is concentrated on video, social in-feed and search advertising on mobile, while desktop display is in decline: 2016 will be the first full calendar year when digital desktop ad spend is down year-on-year in the UK. Of this growth, Google and Facebook account for close to 90%, thanks to their leading offerings in the fastest-growing categories.

  • November 10, 2016

    Virgin Media Q3 2016 results: Continued acceleration

    Virgin Media continued to accelerate in Q3, with subscriber numbers accelerating despite the broader market slowdown, driven by its network extension starting to have a material impact and an enhanced TV offering reversing its pay TV decline. The only weak area was mobile, with revenue and subscriber growth slowing, and convergence stalling. The company hopes that its 4G launch will reinvigorate this; we believe that consumer demand for fixed/mobile convergence remains limited. The early price rise implemented in November will likely help ARPU but harm churn during the rest of the year; for 2017 and beyond the accelerating network extension will increasingly drive volume and revenue growth.