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  • May 13, 2014

    The media day

    We have estimated the breakdown of the media day for UK adults (16+) using standard industry sources. The charts in the attached PDF present a picture of overall time spent with different media in the UK. Over the last 10-15 years the digitisation of content, coupled with internet connectivity and device proliferation, particularly recently with smartphones (now at 63% penetration) and tablets (35%), have given individuals far more ways and means to consume media and communicate with each other. However we also note that 'traditional' media has held steady and still accounts for 6 hours and 50 minutes of daily media time. We have not yet arrived in a post-print, post-TV world, rather a multi-layered one where consumers access media from a wide variety of sources and devices.

  • May 5, 2014

    Facebook extends its ecosystem

    At its f8 developer conference, under the slogan “Build, Grow, Monetise”, Facebook rolled out a slew of new policies and initiatives designed to boost its appeal amongst users, app developers and advertisers. In its drive to encourage developers to build more apps that support the social network, Facebook is attempting to position itself as a “cross-platform platform” with 1 billion+ users that sits on top of iOS, Android and other mobile operating systems. Key announcements included App Links, an open source solution enabling linking across apps, which may drive additional usage, and Facebook Audience Network, an app ad network rolling out this year, which should drive additional margin and could challenge Google AdSense.

  • April 27, 2014

    Facebook: mobile acceleration continues

    Facebook has successfully transitioned its business to mobile, with the number of mobile users now exceeding those on PC, and mobile newsfeed ads accounting for nearly all revenue growth and over half of total revenue, now on a $10 billion annual run-rate. North America and Europe continue to account for the vast majority of revenue and revenue growth, despite flat audience penetration in both regions, as increasing mobile consumption and advertiser take-up have driven sharp increases in ARPU, particularly in the US. Despite tougher comparables and declining desktop revenue going forward, the rapid ramp up in mobile ad revenue, plus initiatives such as video ads, ads on Instagram and planned mobile ad network, should deliver strong growth through 2014 and into 2015.

  • April 21, 2014

    UK internet device and consumption forecasts to 2020

    The boom in mobile device sales accelerated in 2013, with more than four times as many smartphones and tablets as PCs shipped in the UK: smartphones accounted for three quarters of mobile phone sales, and shipments of tablets surpassed PC sales, which fell sharply. By 2020, we forecast that smartphone penetration will rise from two thirds of the population to over 80%, and the number of tablet users will exceed 60%, outstripping the PC internet audience, which we expect to shrink. We now predict that the majority of internet usage will go to mobile devices this year and three quarters by 2020. Mobile is well on its way to becoming the predominant access platform in the UK, as in the US, and most, if not all, future growth in commercial internet revenues will be driven by mobile devices.

  • April 16, 2014

    Netflix extends its tightrope part 2: Abroad

    Netflix is making steady progress with the global expansion of its streaming business, which now makes up 20% of total revenues, but is still far short of its long term vision of 70-80% share. Building a large presence in Europe is vital to long term success. The signs are that Netflix is steadily growing its UK and Ireland base, and performing even more strongly in the Nordics and possibly also in the Netherlands. We are reaching the most critical point of Netflix's European journey, as it contemplates entry into the key markets of France and Germany. Germany looks the more obvious first choice, with rumours of a September launch, but ideally Netflix will want an autumn launch in France too, if it can handle the extra strain on budgets.

  • April 3, 2014

    Prime time: Amazon enters the living room

    Amazon has entered the increasingly crowded digital entertainment TV device marketplace, one which could be strategically more important for the ecommerce giant than tech rivals Apple and Google. The frictionless integration of entertainment and ecommerce on TV represents a bigger consumer milestone than competitor services are offering, and Amazon's brand has huge appeal, though at present it has less market traction for streaming than it does for other products. Content owners and broadcasters remain the real TV gatekeepers, with integration of TV and digital a service-level pipe dream for now, and so Amazon will likely have to accept being one of many, rather than the runaway winner as it is in books.

     

  • April 2, 2014

    Netflix extends its tightrope part 1: At home

    The core US long form streaming subscription business, so vital to Netflix prospects of long term global as well as domestic success as competition increases, shows no sign of slowing, while guidance points to Q1 2014 as another strong quarter Although market research indicates a positive brand image, boosted by Netflix's entry into original content commissions, Netflix cannot afford to slacken in its efforts to build its subscriber base due to strong upward competitive pressures on content obligations Content delivery is the other big cost challenge. There is no guarantee that the recent deal with Comcast will last, as the leading ISPs contend with conflicts of interest that arise from wishing to support the traditional model of linear TV but also to exploit the potential of long form online video.

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    March 18, 2014

    Creative UK

    This report on the digital transformation of the creative industries in the UK was produced by Enders Analysis and research partner Bain & Company, to support the Creative UK event organised by Enders Analysis and held at the BT Centre on 18 March 2104. The event is sponsored by BT, Enders Analysis, Bain & Company, Powerscourt and Shine Group. The UK's rate of business creation since 2010 has been especially strong relative to other major economies, backed by a solid trend to self-employment. Business creation in the creative industries – music, film, television, advertising, the arts, book and newspaper publishing - has been a major contributor, up 17% since 2010. Underpinned by a generation of investment in broadband, digital technology is changing how many creative-sector companies produce and distribute products. But experiences vary widely:

    For advertising and marketing companies, the transition has had a benign impact on revenue; online's share of total advertising was at 36% in 2012, placing the UK in the vanguard of digital advertising. Television has remained relatively resilient to disintermediation by the internet and TV remains the single biggest advertising medium. Consumer-facing newspapers have undergone a painful transition as pennies from digital replace pounds from print and ad sales. Recorded music sales halved in the decade to 2013, but digital accounted for 50% of revenues in 2013, and the corner has been turned; artist management is being transformed by the use of online media. New online pure play businesses have sprung up, like Rightmove and Zoopla Property Group, AutoTrader, LoveFilm and Spotify. The crafts industries have been transformed by online marketplaces like Etsy, which allow them to serve their customers wherever they may be. YouTube is emerging as an important outlet for UK creative talents.

  • March 7, 2014

    Slides for Media & Telecoms: 2014 and Beyond, part 2

    Slides from the presentations by the following speakers at the Media & Telecoms: 2014 and Beyond conference on 4 February 2014: James Purnell, BBC; Dido Harding, TalkTalk; NIcola Mendelsohn, Facebook; John Paton, Digital First Media; Mike Darcey, News UK; Ashley Highfield, Johnston Press; Michael Comish, Tesco.

  • March 7, 2014

    Media & Telecoms: 2014 and Beyond, part 2

    Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 4 March 2014. The event featured talks by 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts of the talks given by seven of those speakers: James Purnell, BBC; Dido Harding, TalkTalk; Nicola Mendelsohn, Facebook; John Paton, Digital First Media; Mike Darcey, News UK; Ashley Highfield, Johnston Press; Michael Comish, Tesco.

  • March 5, 2014

    Media & Telecoms: 2014 and Beyond, part 1

    Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 4 March 2014. The event featured talks by 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts of the talks given by six of those speakers: Sir Martin Sorrell, WPP; Gavin Patterson, BT; Andrew Griffith, BSkyB; Thomas Rabe, Bertelsmann; David Dyson, Three UK; David Abraham, Channel 4.

  • March 5, 2014

    Slides for Media & Telecoms: 2014 and Beyond, part 1

    Slides from the presentations by the following speakers at the Media & Telecoms: 2014 and Beyond conference on 4 February 2014: Andrew Griffith, BSkyB; Thomas Rabe, Bertelsmann; David Dyson, Three UK.

  • February 21, 2014

    Facebook & WhatsApp – an expensive limited defence

    In an audacious move to minimise the risk of mobile social disruption, Facebook is to acquire leading messaging app Whatsapp for up to $19 billion, or $42 per user, or 11% of Facebook's current market cap. Messaging platforms are becoming the new social media, particularly for younger demographics, and while Facebook/WhatsApp will be huge in mobile, other services could still side-step into Facebook's territory. The price for WhatsApp may be justifiable to counter the threat, but Facebook has only bought one of many, and paying a full price may encourage the others; expensively buying every competitor does not feel like a long-term strategy.

  • All together now – Why aggregation is the future of TV
    All together now – Why aggregation is the future of TV
    January 23, 2014

    Where have all the young viewers gone?

    Watching traditional linear TV has shown a sharp decline among younger adults over the last two to three years and the question is how far it has to go before bottoming out. This report explores the causes and presents our forecasts up to 2020. We see the main causes of this as the growth of online connectivity associated with the proliferation of screens via smartphones and tablets, the increasing functionality of these other screens, the increasing population of connected TV sets and the growing volume of long and short form content that can be accessed over the internet. Examination of current “connectivity” trends suggests that 2013 will prove the peak year of decline. Thereafter we expect trends to stabilise over the next three or four years without fundamental change to the linear TV landscape.

  • January 21, 2014

    Twitter and the Interest Graph

    Explosive growth in take-up of smartphones and tablets means that the effective size of the internet will increase by several multiples within the next few years. This transformation in scale comes with a major change in character and operating dynamics, creating new opportunities and revenue streams. Twitter is unique amongst social apps: it gives new users a blank canvas in which they can (and must) create their own social network reflecting their own interests, hence building an ‘Interest Graph', but onboarding new users remains a challenge. Revenue at Twitter is now on a $600 million annual run-rate, scaling rapidly since the introduction of ‘native ads', and seems set for further growth: the key question is whether it can achieve breakout user growth and mass market scale.

  • December 19, 2013

    2013 round up and topics for next year

    2013 has seen yet another year of strong growth in consumer adoption of mobile devices and screens adding to the challenges facing traditional media. Press and radio have long been affected, but television is now starting to feel the heat. BT and Sky's contest for premium pay-TV sports rights has intensified. August saw the launch of BT Sport, while BT's acquisition of the European football rights in November was a clear statement of intent, spending half of Channel 4's total programming budget on approx. 200 hours of content. The UK has seen buoyant advertising growth of around 4% in 2013, with similar growth expected in 2014, in the context of the strongest economic recovery in Europe.

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    November 29, 2013

    Scotland Independence: Media and Telecoms

    Scotland's SNP-led Government has published its White Paper setting out its assumptions for independence, including on broadcasting and telecommunications, where spectrum management will be assumed by the new Government, implying a discontinuity in existing UK-wide 3G and 4G licenses attributed by Ofcom. The SNP promises no change in the broadcasting environment except for the creation of a Scottish Broadcasting Service (SBS), which would occupy the BBC's position today. Channel 3, 4 and 5 licensees will be able to continue to broadcast without discontinuity, although free access to spectrum was not promised, which BSkyB of course doesn't require. The big ask is BBC One and BBC Two on free-to-air terms, implying a subsidy of £270 million to Scotland. This seems very unlikely to be agreed by the rest of the UK (rUK), since BBC Worldwide offers only commercial terms to other countries. However, the BBC will not comment on this assumption, so the Scots will only learn of the facts after the referendum.

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    November 13, 2013

    Vivendi 3.0: Back to square one?

    The Vivendi empire is shrinking in revenues, cash flow and also in debt: Activision Blizzard and Maroc Télécom were sold in 2013, SFR will be spun off. We expect SFR's topline revenue decline to halt in H1 2014, ending the pain from the disruptive launch of Free Mobile in 2012. With SFR and Bouygues Telecom intending to conclude a network-sharing agreement outside urban areas by the end of 2013, SFR should have a more positive story to tell investors when it comes to the Paris stock market in late 2014. With SFR spun off, Vivendi 3.0 will own just Canal+, Universal Music Group (UMG) and GVT (telecoms operator in Brazil), three companies without visible synergies. The end point appears to be the full dissolution of the Vivendi conglomerate.

  • October 21, 2013

    Tony Hall’s vision for the BBC

    For the BBC's DG Tony Hall, “Where next?” primarily means more digital, expanding its iPlayer internet TV and radio application and offering greater personalisation. These moves form part of a wider strategy to ensure BBC services and programming can be delivered seamlessly across devices in the most relevant form, whilst maintaining access and appeal to all age groups. Reaction from commercial rivals and commentators has been muted, likely saving powder for the soon-to-begin battle over the BBC's scope and funding from 2017, when the current Royal Charter expires

  • October 20, 2013

    Apple takes the high road

    Apple's two new iPhones both secure its grip on the high end (for now) and extend a cautious toe into (slightly) cheaper waters. They will not deliver a step change in global sales growth, but should deliver solid performance. 9m unit sales at launch are impressive, but 200m updates to iOS 7 (double last year's figure) point to the continuing strength of Apple's ecosystem and its ability to deploy innovative new features. We continue to believe there is room in Apple's portfolio for a $350-$450 phone without weakening Apple's quality of experience or brand positioning, but this is clearly now off the agenda for another year.

  • September 12, 2013

    Microsoft and Nokia: marriage of irrelevance

    Microsoft dominated PCs and Nokia mobile phones, but both are irrelevant in the dominant model for tech in the next decade, smartphones and tablets. An acquisition may have been necessary, but by itself it solves nothing. Smartphones are now half of all mobile phone sales, and the 255m smartphones and tablets sold in Q2 2013 dwarf the 76m PCs sold. Microsoft now powers less than a quarter of all the personal computing devices being sold. Microsoft retains a leading position in enterprise and in console gaming. But if it cannot return to relevance in consumer, the strength of the whole business will suffer.

  • September 12, 2013

    Global recorded music 2013: turning the corner

    Global consumer expenditure on recorded music fell 4% in 2012 to $20.7 billion on the continued decline of sales of the CD and other physical formats to $12.3 billion in 2012, while retail spending on digital formats rose 8% to $7.1 billion. We predict the global market will turn the corner in 2014 and reach $22.4 billion in 2017. For 2012, we estimate the share of digital at 35% of retail sales in the top five markets of the US, Japan, Germany, the UK and France. In Japan, the rebound in CD sales and difficult mobile-to-internet transition reduced the share of digital in 2012 to just 15% of retail. For the other markets, sliding CD sales and digital growth continue to increase the share of digital in retail sales, with the US in the lead with 55% digital share. A key theme in 2013 and in our forecasts is the take-off in revenues from subscriptions to access services, both stand-alone and bundles from mobile carriers. Bundling leverages the personal, mobile and connected nature of smartphone music activity, reduces decision-making and price barriers, and is a more powerful driver of adoption than stand-alone offerings. At this point, we still expect ownership to remain more important than access in the market for digital music by 2017

  • September 10, 2013

    Virgin Media Netflix TTM OTT pact

    Virgin Media and Netflix have agreed on a ground breaking trial that blurs the traditional distinction between pay-TV platforms and OTT services by permitting TiVo customers direct access to Netflix via their set-top boxes The deal promises to benefit both parties as Netflix enhances the Virgin Media content offer to its TiVo customers with minimal risks of cord-shaving, while availability on Virgin Media TiVo offers Netflix the prospect of incremental subscription growth The question is whether other pay-TV platforms will follow suit, including Sky with its competitive interests in film rights acquisition, but where the Netflix value to UK viewers is increasingly seen to lie in its TV content

  • August 20, 2013

    Channel Netflix

    Netflix H2 2013 results show continuing steady expansion in its domestic US and international streaming businesses, mostly towards the upper end of company guidance Netflix has always posed as a disruptor, yet there is nothing revolutionary in its business model or content origination strategy, while confidence in the future owes much to growing acceptance of Netflix as another channel outlet by incumbent content owners Although Netflix releases no international streaming data by country, there is some evidence to suggest it is edging towards two million in the UK; but is still on a tightrope as it races to add subscribers and revenues to cover its fast growing and somewhat shrouded content obligations