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  • September 27, 2016

    European mobile in Q2 2016: Down but resilient

    European mobile service revenue growth worsened slightly in Q2, dropping to -1.2% after three consecutive quarters at -0.8%. Southern Europe significantly outperformed the North, reversing the regional trend of recent years. Mobile service revenue growth was thus quite robust given these factors, helped by price firming in a number of markets, particularly Spain

  • September 14, 2016

    Untapped not tapped out -The over 50s -­ systemic consumption an [...]

    More than one third of the UK population is over 50 (over 23.6 million people) and this cohort is projected to keep growing. They account for substantial wealth, assets and expenditure. Over 50 consumers are more urban, educated, and tech-­‐savvy than the over 50s of previous generations. Given their outsize impact on the economy, influence on social trends and opportunity for brands, we believe the marketing industry underappreciates the diversity of over 50s, and their differentiated requirements. The key group in terms of potential in growth, wealth, expenditure and digital adoption are the 50-­‐65s: they are neither their children nor their parents.
  • September 5, 2016

    UK mobile market Q2 2016: Revenue growth slows, profitability res [...]

    UK mobile service revenue growth dipped in Q2 to -1.7%, a 1.5ppt drop from the previous quarter. About 0.2ppts of this drop was accounted for by a (temporary) jump in the MTR cut impact, but the rest was due to underlying factors. These factors were various and differed in their impact on the different operators, and they include the EC-mandated roaming cuts, the leap year effect and the continued growth of SIM-only, as well as pricing changes that appear to have been reversed since the quarter’s end. Macroeconomic weakness does not appear to have played a part so far, mainly because there has not been any consumer-led macroeconomic weakness, and although some indicators have worsened since the quarter’s end, the change is still quite slight so far.

  • August 4, 2016

    BT Q1 2016/17 results: Not shabby

    BT Group’s revenue growth was roughly unchanged in the quarter at 0.4%, with continued strong consumer growth mitigated by regulated and structural challenges in the rest of the Group.

    Both broadband and superfast broadband adoption is slowing, but BT is compensating with improving market share for the former, and the prospect of further uplifts from ultrafast for the latter.

    Regulatory uncertainties are likely to continue to weigh, with the current Openreach debate to be closely followed by the not-exactly-unimportant issue of copper and fibre pricing/regulation from April 2017.

  • July 26, 2016

    Vodafone Q1 2016/17 results: Price-led growth

    Vodafone Europe’s mobile service revenue growth continued to recover, despite regulatory and calendric headwinds, and continued customer service issues in its UK business. The improvement was driven by fairly aggressive price increases, most acutely in Spain, which drove fairly dramatic ARPU growth improvements but also subscriber growth slowdowns.

  • July 18, 2016

    Mobile Google: beyond the smartphone

    Google’s recent product updates and upcoming features aim for as many users on as many platforms and devices as possible – a return to strategic form. The company has a dual approach: using Android as a mobile trend-setter while also devising new ways for users and developers on other platforms to use Google services. The reach provided by these initiatives will help Google’s machine learning algorithms to better understand and predict user intent – the cornerstone of the company’s ad business.

  • July 5, 2016

    UK mobile market Q1 2016

    UK mobile service revenue growth marginally improved in Q1, to 0.5% from 0.3% in the previous quarter, with the market now having been stuck at a modest but positive growth level for two full years

  • May 3, 2016

    Internet trends: Mobile engagement from babies to boomers

    While internet and device penetration among younger age groups are approaching saturation, the over 55s have seen an explosion in smartphone adoption, up 83% year-on-year, expanding opportunities for monetisation. More than 50% of ecommerce transactions are now through mobile. Smartphones widen the scope for anytime anywhere mcommerce events and larger-screened phones and tablets facilitate high value transactions. Internet advertising continues to grow quickly, display faster than search and classifieds. Online advertising spend in H2 2015 grew 14% year-on-year to just over £2 billion and the rise of mobile ad spend is dramatic.
  • April 20, 2016

    Inside Facebook’s ad machine

    Facebook is extending its lead over rival Google in the fast-growing market for mobile display advertising, helping publishers solve the dilemma of mobile content discovery. Facebook’s success with advertisers is enabled by a mobile-centred data platform with unparalleled capabilities to profile users and identify them across devices and online properties. Strategic investments in online video, messaging, and virtual reality all bode well for the future of Facebook’s ad business, although regulatory uncertainty on privacy looms on the horizon.
  • April 14, 2016

    Away from home: The online challenge for PSBs

    On TV, UK public service broadcasters (PSBs) have operated within a privileged ecosystem; a guaranteed electronic programme guide (EPG) prominence placing their channels at the forefront, helping sustain their market share and spawning digital families. But technological changes within the TV set are eroding this prominence, and on devices, such structural advantages are non-existent. To confront dramatically falling mobile engagement, despite consistently excellent content, the PSBs need to collaborate and replicate their privileged linear position or they will struggle against the major SVOD players.
  • April 12, 2016

    European mobile in Q4 2015 – The challengers’ challenge

    European mobile service revenue growth was flat at -0.8%, while underlying country movements were somewhat more dramatic. The key highlights were Italy returning to positive growth driven by pricing stability, and France showing worsening growth decline for the first time in over two years impacted by challenger telco pricing cuts. An assessment of these challenger telcos highlights a somewhat precarious position, as continued price aggression yields diminishing incremental gains, and they all remain some way from gaining the scale to achieve profitability. The only incentive for challengers to remain aggressive is as an encouragement for their competitors to buy them; increasing regulatory hurdles to consolidation would remove even this incentive, leaving price increases as their only rational route to profitability.
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  • March 31, 2016

    UK mobile market Q4 2015: Growth softly softens

    UK mobile service revenue growth dipped down in Q4, but at least remained still just positive at 0.3%. The dip was driven by contract ARPU weakness at the largest three operators, mitigated by strong ARPU growth at the smallest operator H3G. Looking forward, the sources of weakness (growth of SIM-only and tariff policy adjustments) look more temporary than the sources of growth (data volume growth filling up capacity). SIM-only is likely to hit a natural ceiling, whereas data volume growth has no ceiling in sight and the scope for network capacity expansion is limited. With CK Hutchison currently negotiating with the European Commission in regards to the fate of the H3G and O2 merger, there is a high level of uncertainty on the future of the structure of the UK mobile market. Merging the two networks would generate extra capacity and capability, likely increasing competitive intensity, but the precise form this would take is unclear, as is the future of the brands and the identity of the capacity MVNO recipient(s).
  • Mobile Google: beyond the smartphone
    Mobile Google: beyond the smartphone
    March 30, 2016

    Ofcom’s Digital Communications Review: Blessed are the investo [...]

    Ofcom is encouraging competitive investment in local access networks using BT’s ducts and poles; in our view this is very unlikely to happen on a large scale, due to both the lack of spare capacity in existing plant and the generally poor prospective economics of a third local access network in the UK. Ofcom’s favoured model for Openreach is an enhanced version of the current structural separation model, and this is most likely to be reached via a negotiated settlement with BT; this and a number of other proposed measures, if implemented, will increase Openreach’s costs, and these costs will be re-charged to both BT’s retail division and its DSL competitors. Ofcom remains keen to retain four mobile network operators, in spite of clear evidence that at most three are viable at current retail price levels, and it is keen to implement a number of interventionist consumer protection measures that suggest it is keen on competition in theory, but not so much in practice.
  • March 23, 2016

    Apple’s iPhone bargain

    More attractively priced than previous entry level iPhones, the new SE extends Apple’s smartphone lineup down towards the mid-price segment to better compete with Android over price-sensitive users. At a time of investor concern over slowing down iPhone unit sales, the SE marks the first shift in Apple’s strategic calculus for the iPhone from gross margins to unit volumes. SE supports the iOS ecosystem in a crucial period of growth for mobile payment services, making the entire iPhone roster Apple Pay compatible.

  • March 16, 2016

    Blocking in the free world: the threat of online ad blocking

    Currently at a manageable level, ad blocking has the potential to fatally undermine the business models of media owners that depend on advertising, as well as restricting advertisers’ ability to reach audiences online. To head off this threat, publishers, agencies and advertisers need to understand the diverse things that users do not like about digital advertising, fix them, and communicate this change of behaviour to audiences. The move from desktop to mobile, from banner to native and from web to apps provides advertisers and publishers with the opportunity to provide an acceptable advertising experience, ensuring that blocking of these new formats and properties never reaches the threatening levels currently on desktop.

  • Virtual Reality in 2016: Launch Year Challenges
    Virtual Reality in 2016: Launch Year Challenges
    March 14, 2016

    Virtual Reality in 2016: Launch Year Challenges

    Virtual Reality (VR) is hitting the high street as the first premium headsets with mass-market appeal become available for developers and consumers. Core gamers are the initial focus of content developers for the new VR platforms served on top-end PCs and Sony’s PS4 console. The VR ecosystems of Facebook and Google are focused on user-generated 360 degree video content, whereas professional creation tools, workflows, and delivery infrastructure will likely take several years of experiments to mature.
  • March 7, 2016

    Programmatic advertising in the mobile era: direct marketing succ [...]

    Programmatic advertising is quickly gaining digital market share across the globe. We discuss the key market trends fuelling the rise of programmatic advertising, the expected impact to the advertising market, the value of programmatic advertising within Australia, as well as the issues, myths and opportunities associated with programmatic advertising.

  • March 1, 2016

    Native advertising in Europe to 2020

    Native advertising is growing sharply as a result of the shift in digital audiences and consumption to mobile devices, where limited screen size and usage modes favour formats that mirror the form or function of the platform and media. Publishers and advertisers are moving rapidly to exploit the opportunity. Publishers see unique native formats as a way to distinguish their ad offering in a highly commoditised internet advertising space, while advertisers and their agencies hope to get more bang for their buck. Between 2015 and 2020, we expect native advertising spend across Western Europe to grow by 156% to €13 billion, representing 52% of internet display and three quarters of net growth in internet display.
  • February 22, 2016

    EE Q4 2015 results: Slowing revenue, accelerating profits

    EE reported solid contract net adds, but weakening contract ARPU, which drove mobile service revenue growth down to -2.5%. However, EBITDA growth was spectacular at 15% in H2, suggesting that much of the subscriber growth is in low revenue high margin segments such as SIM-only and B2B, as well as cost control being strong. EE’s new parent BT is likely to be able to drive further progress in these areas, and the outlook is robust even if quad play demand remains low in the consumer market.
  • 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 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.

  • 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 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.