February 1, 2016 Reports
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
China holds tremendous appeal to studios and OTT video services, boasting an audience of 460 million online video users in mid-2015 [...]
January 29, 2016 Reports
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.
Rumoured details of Google’s traffic acquisition deal with Apple and also the size of its Android revenue have prompted many to d [...]
December 18, 2015 Reports
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.
The Copyright Royalty Board (CRB) delivered its Web IV ruling on statutory SoundExchange licensing rates for webcasters for 2016-20 [...]
December 8, 2015 Reports
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.
Smartphones will deliver half of all time spent online in 2016, and online time on smartphones will grow a further 50% by 2020. The [...]
December 1, 2015 Reports
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.
This year marked the second annual IABUK Digital Upfronts. As well as Facebook, Google/YouTube, Aol, Yahoo!, Twitter, BuzzFeed, Vic [...]
November 13, 2015 ReportsVodafone Europe’s revenue growth trend continued to improve, and the improved operating leverage allowed it to return to EBITDA growth after years of decline. Its mobile business was however more mixed, with improved contract net adds but worsening ARPU and revenue still firmly in decline, with growth from its recently acquired cable businesses partially disguising this. The benefits of its Project Spring investment are not yet clear, and the current wave of in-market mobile consolidation may leave Vodafone a weaker player across much of its footprint.Vodafone Europe’s revenue growth trend continued to improve, and the improved operating leverage allowed it to return to EBITDA growth after years of decline. [...]
November 9, 2015 Reports
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.
Apple’s results underlined its status as the tech industry’s biggest and most profitable company due to the iPhone, accounting [...]
October 29, 2015 Reports
EE reported strong mobile contract net adds in Q3, after a string of weaker performances earlier in the year following the closure of Phones 4U and retirement of the Orange and T-Mobile brands. Contract ARPU growth remained at -3.1%, keeping mobile service revenue in modest decline (-1.4%), a disappointing result in comparison to modest positive growth at its rivals in recent quarters, although improving subscriber numbers should start to bridge this gap. Fixed broadband subscriber growth suffered in a competitive quarter, with EE unable to maintain momentum when faced with the launch of BT Sport Europe and corresponding increased marketing spend from Sky.
EE reported strong mobile contract net adds in Q3, after a string of weaker performances earlier in the year following the closure [...]
October 14, 2015 Reports
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.
Non-subscribers can download this report in full - alongside all our other coverage of the BBC during the Charter Review process - [...]
October 14, 2015 Reports
European mobile service revenue growth improved to the highest in over four years driven by improvements in the three slowest growing markets of late. Out-of-bundle revenues are still declining at a rate of over 10% but data revenue growth trends point to underlying strengths in the revenue profile. Looking at the longer term picture begs the question as to whether the quarter’s improvement can be repeated over the next 18 months, transforming the industry into one with extremely healthy revenue growth of 5%-10%; on balance we are not very optimistic. Two major in-mobile transactions are yet to be approved by the EC, namely H3G/O2 in the UK and an H3G/Wind JV in Italy. The recent precedent from Denmark is somewhat discouraging, although the Danish consolidation was unusual in some respects. Nonetheless comments from the new competition commissioner Margrethe Vestager suggest that regulatory caution towards 4-to-3 mergers is still high. Progress towards convergence is continuing with few operators in a post-consolidation world being either 100% fixed or 100% mobile. Convergence has to date been discount-led and damaging to market revenues, but post-consolidation, operator rhetoric has been reassuringly more focused on intentions for increased investment in both LTE mobile networks and high speed fixed networks.
European mobile service revenue growth improved to the highest in over four years driven by improvements in the three slowest growi [...]
October 5, 2015 Reports
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.
Despite dropping the Fire Phone, Amazon has upped the ante in its battle for digital media consumers, upgrading its Fire TV devices [...]
September 3, 2015 Reports
The UK’s love affair with the smartphone continued in Q2: 85% of adults under 55 and a third of over-55s now have smartphones, which are becoming the primary method of accessing the internet, accounting for over 40% of time online. Among teens and younger adults internet usage is now higher than TV viewing, though this is still offset overall by the massed ranks of older viewers who remain glued to their TV sets. Commercial revenues derived from mobile devices still trail their share of internet usage but the gap is closing fast: in Q2, smartphones and tablets generated nearly half of consumer e-commerce transactions, while mobile ads represented 34% of internet search and display advertising.
The UK’s love affair with the smartphone continued in Q2: 85% of adults under 55 and a third of over-55s now have smartphones, wh [...]
August 27, 2015 Reports
The UK is now a smartphone society: by the end of this year smartphone users will exceed the PC internet audience and by 2020 we project penetration will reach 83%. The average smartphone user now spends an hour and three quarters a day online, significantly more than the equivalent for PC and tablet, and phones already account for nearly half of all time online. We are positive on tablet user numbers, and think PCs will be resilient, especially for work users. All in all we expect connected time in 2020 to be 21 billion hours higher than in 2015, up over 35%. Commercial revenues via smartphones and tablets still lag their share of internet usage, but the monetisation gap versus the PC is closing fast: the newer devices accounted for 27% of internet search and display advertising last year, up 8ppts versus 2013, and 36% of e-commerce transactions, up from a quarter a year earlier. Consumers are already thinking mobile-first; businesses will have to follow.
The UK is now a smartphone society: by the end of this year smartphone users will exceed the PC internet audien [...]August 26, 2015 Reports
UK mobile service revenue growth dipped a touch in Q2, falling to 0.9% from 1.0% in the previous quarter, although all of the dip and more was due to the reintroduction of mobile termination rate cuts in the quarter, with underlying growth rising to 1.3%. O2 is now the fastest growing operator in both contract net adds and service revenue growth terms, exceeding even the much smaller H3G, and its revenue growth lead over EE and Vodafone expanded during the quarter. BT’s consumer mobile launch was relatively successful from BT’s perspective, with it garnering 100k subscribers in the first three months, but this appeared to have no impact at all on the mobile operators, which had a relatively strong quarter for contract net adds in spite of this. We conclude that much of the fixed line MVNO base growth is coming from impulsively upgrading prepay users, consumers wanting a spare SIM and other MVNO customer bases – sources that do not threaten the MNOs.
UK mobile service revenue growth dipped a touch in Q2, falling to 0.9% from 1.0% in the previous quarter, altho [...]August 6, 2015 Reports
EE remains the slowest growing of the ‘big 4’ UK MNOs or the only one in decline with service revenue growth at -1.8%, a touch lower in reported terms despite a slight underlying improvement. Adjusted EBITDA margin improved to a record 26.6%, a somewhat fortunate compromise on the loss of gross adds share since the demise of Phones 4U – and associated reduction in (expensive) third-party gross adds. In a seasonally low broadband quarter, EE actually gained net adds share, showing resilience to heightened marketing from Sky and underscoring the merits of EE’s in-store cross-selling strategy.
EE remains the slowest growing of the ‘big 4’ UK MNOs or the only one in decline with service revenue growth at -1.8%, a touch [...]July 28, 2015 Reports
Consumer ebook sales exploded after Amazon launched its Kindle in the UK in 2010, but growth rapidly slowed, and disruption was limited by genre, creating parallel ebook and physical book markets. Compared to the relentless downward spiral of music purchasing, these trends have been heartening for publishers and booksellers, but there are signs that slower, more complicated and insidious disruption is emerging. Decades of steady, albeit slow, growth in total book sales have been reversed, as consumers spend more time on a variety of mobile-delivered services, including some in classic content categories for books.
Consumer ebook sales exploded after Amazon launched its Kindle in the UK in 2010, but growth rapidly slowed, and disruption was lim [...]July 24, 2015 Reports
Apple delivered strong results in Q3 2015, selling a record number of iPhones for the June quarter, though iPad sales slid dramatically as consumers switch to ‘phablets’ and the company did not provide any detail on early sales of Watch, its biggest product launch since 2010. We remain bullish both on the iPhone and the Watch’s long term potential, though the latter remains a work in progress and, like many of Apple’s existing customers, we await the next iteration with interest; by contrast the iPad may have peaked already. Rising revenue from App Store, up 24% year-on-year, as well as new products like Apple Music and Apple Pay, should continue to boost the contribution from Services, and we expect this to evolve into a more material part of the business, but ultimately it’s still all about the iPhone.
Apple delivered strong results in Q3 2015, selling a record number of iPhones for the June quarter, though iPad sales slid dramatic [...]June 25, 2015 Reports
European mobile service revenue growth improved once more in Q1, rising 1.1ppts to -1.6%, continuing a trend of underlying growth improvement that started in Q3 2014. The improvement was mainly driven by easing declines in France and Italy but deteriorating performance in Spain meant that Europe-wide growth did not improve by as much as in the last two quarters. Pricing stabilisation appears again to be the main driver of recovery (in those countries that are recovering) with more rational pricing allowing operators to monetise rapid data usage growth. However, more price cut moves have been made in France since the end of the quarter, Italy remains an inherently unstable market and Spain again suffered this quarter from convergence discounts. As data usage continues to grow rapidly, customer concern for high quality data networks increases, which makes investment in superior 4G networks a clearer differentiator for operators to convey to customers. The UK market leads the EU5 in this regard, and has taken advantage through rationally priced tiered data plans, but this effect spreading to the rest of the EU5 is a source of optimism as 4G roll-outs continue across Europe.
European mobile service revenue growth improved once more in Q1, rising 1.1ppts to -1.6%, continuing a trend of underlying growth i [...]June 17, 2015 Reports
UK mobile service revenue growth continued to improve, rising to 1.2% in Q1, a modest figure but still the best of the five largest European mobile markets, albeit weaker than the UK consumer fixed line market (4%-5%). O2 continued to be the strongest grower of the ‘big 3’, and maintained over 40% share of contract net adds. Both Vodafone and EE appear to have suffered from the demise of Phones 4U, having been its biggest (and latterly its only) network operator suppliers. EE is also suffering from the gradual withdrawal of its Orange and T-Mobile brands, which is forcing it to work harder to both attract and retain customers. Vodafone launched a competitively priced consumer fixed broadband offer on 10 June. EE has shown that there is an opportunity for Vodafone to have some limited success cross-selling broadband through its shops, but O2's mobile-only success and EE's struggles in its mobile business suggest that this will not drive improved mobile performance
UK mobile service revenue growth continued to improve, rising to 1.2% in Q1, a modest figure but still the best of the five largest [...]June 5, 2015 Reports
The latest numbers for Q1 2015 show strong device and internet user growth, with more of the population online than ever before, including more than 90% of under-55s. Growth amongst older groups, however, has slowed to a crawl. Participation in online activities is up across the board, but digital media data shows spend on ebooks and digital music struggling, with the latter being heavily impacted by the rise of unlimited streaming models such as Spotify. The story of mobile's surge continues, with almost a half of e-commerce transactions and a third of search and display ad spend now going to mobile. Most of these mobile devices are Android, but iPhone seems to have gained long term share with its larger phones. Google services, however, have cross-platform reach.
The latest numbers for Q1 2015 show strong device and internet user growth, with more of the population online than ever before, in [...]June 4, 2015 Reports
Vodafone Europe’s revenue growth improved again in the March quarter, but not by as much as the previous trend, or by as much as the mobile market in general. Operational trends look more solid, with data growth continuing to accelerate and Project Spring delivering improvements in some markets. The biggest blip was in Germany, a quad play market for Vodafone, and we remain sceptical of the operational benefits of convergence as Liberty Global merger speculation re-surfaces.
Vodafone Europe’s revenue growth improved again in the March quarter, but not by as much as the previous trend, or by as much as [...]May 6, 2015 Reports
EE reported improved mobile service revenue growth in Q1 but it is still shrinking at -1.7%; a disappointing performance now that all of its competitors have moved back into growth. The main causes of its underperformance appear to be the impact of the gradual retirement of the Orange and T-Mobile brands, and the loss of sales from Phones 4U which closed last year, with differentiation through superior 4G not (yet) able to make up for these factors. EE’s fixed line business was the star of the quarter with 50k customers added and 15% revenue growth. It seems to have cracked the formula of cross-selling broadband into its mobile base, a useful skill in the current market context.
EE reported improved mobile service revenue growth in Q1 but it is still shrinking at -1.7%; a disappointing performance now that a [...]April 30, 2015 Reports
The UK’s three main Westminster parties converge on sustaining the dynamic growth of the digital economy and the vibrant creative industries. The biggest area of divergence is on the EU. The Conservatives plan to hold an “in-out” referendum by 2017, while Labour and the Lib Dems are pro-EU and plan to engage with the Digital Single Market. Other important areas of disagreement include the future of the BBC and the Licence Fee, press regulation and reform of media plurality policy.
The UK’s three main Westminster parties converge on sustaining the dynamic growth of the digital economy and the vibrant creative [...]April 27, 2015 Reports
Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts from some of the talks, and you will find accompanying slides for many of the presentations here. Videos of the presentations are available on the conference website.
Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The even [...]