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March 5, 2014Media & Telecoms: 2014 and Beyond, part 1
ReportsEnders 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.
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March 5, 2014
Slides for Media & Telecoms: 2014 and Beyond, part 1
ReportsSlides 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.
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February 21, 2014Facebook & WhatsApp – an expensive limited defence
ReportsIn 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.
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January 23, 2014Where have all the young viewers gone?
ReportsWatching 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.
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January 21, 2014Twitter and the Interest Graph
ReportsExplosive 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.
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December 19, 20132013 round up and topics for next year
Reports2013 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, 2013Scotland Independence: Media and Telecoms
ReportsScotland'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?
ReportsThe 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.
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October 21, 2013Tony Hall’s vision for the BBC
ReportsFor 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
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October 20, 2013Apple takes the high road
ReportsApple'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.
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September 12, 2013Microsoft and Nokia: marriage of irrelevance
ReportsMicrosoft 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.
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September 12, 2013Global recorded music 2013: turning the corner
ReportsGlobal 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
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September 10, 2013Virgin Media Netflix TTM OTT pact
ReportsVirgin 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
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August 20, 2013Channel Netflix
ReportsNetflix 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
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August 6, 2013UK internet device and consumption forecasts to 2020
ReportsReports of the death of the PC have been greatly exaggerated, but rapid adoption of mobile devices is changing how, when, where and why consumers access the internet. Over the next few years, we forecast that PC user growth will be limited to population growth, smartphone penetration will rise from two thirds currently to over 80% by 2020, and tablet users will converge to the same level as the PC audience. In addition, we project that overall internet consumption will nearly double by 2020, with PC-based usage declining before levelling out, and smartphone and tablet use increasing threefold. Of the traditional media sectors, we expect print media to be the most negatively affected by the rise of the mobile internet, with less impact on radio and TV viewing and advertising likely to be relatively resilient.
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August 5, 2013Notes on a cheap iPhone
ReportsA cheaper iPhone has been discussed almost since the original launch in 2007, but we believe costs have fallen and the market developed to the point that it now makes sense for Apple to offer a $200-$300 (unsubsidised) model. We see a positive but fairly small financial impact on Apple. The key benefit would be defensive: by extending the ecosystem and preserving iOS as developers' first choice, Apple would secure the whole portfolio. We believe a well-executed and distributed $200-$300 iPhone would sell double-digit millions of units a significant challenge to Android OEMs and Google. However, the US market's pricing structure might limit the impact there.
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July 18, 2013Japan’s recorded music still one of a kind
ReportsRecorded music retail sales in Japan were flat in 2012 at $5.8 billion on the unexpected bounceback of CD sales, amidst the ongoing collapse of mobile music sales
Smartphone adoption is driving up internet track sales, which topped mobile track sales in 2012, but the internet's price discount to mobile is squeezing track revenues
Japan will be dynamic in 2013 and beyond for access' subscription services, newly launched by Sony, J-pop label-backed RecoChoku, and carriers
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July 8, 2013Google + Android and mobile
ReportsBy the end of 2013 there will be more iOS and Android devices in use than PCs. Google is using Plus and Android to reposition itself to take advantage of this, extending its reach and capturing far more behavioural data. We believe a helpful way to look at Google is as a vast machine learning project: mobile will feed the machine with far more data, making the barriers to entry in search and adjacent fields even higher. For Google, Apple's iOS is primarily another place to get reach: we see limited existential conflict between the two. However, mobile use models remain in flux, with apps and mobile social challenging Google's grip on data collection.
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May 28, 2013
Google Play Music All Access
ReportsGoogle Play, the digital content platform from Google for Android devices, has added a music subscription service to the sale of music, ebooks, videos and apps. All Access, available only in the US initially, benefits from integration in Google Play, the default storefront on Android smartphones and tablets (excepting Amazon's Kindle Fire). All Access isn't available on Apple devices, in the majority in the US, severely limiting its reach. Google's main objective with Google Play is to support the Android ecosystem and attract and retain Android device owners, and thus OEMs and developers. We expect Google Play to operate slightly above break even like iTunes.
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May 23, 2013
Facebook and mobile social networking in the UK
ReportsAs smartphones have grown in the UK, so has mobile use of social networks However, mobile messaging services that offer an alternative channel to Facebook have become almost as important Meanwhile analysis by smartphone platform shows that iPhone users continue to have a higher propensity to install and use apps than do Android users. Android skews young and lower income, and messaging apps in particular start as a means to save money (though they are now much more than that), but even in this category iPhone users appear to care more
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April 29, 2013TV platform growth forecasts 2013-2020
ReportsThe completion of digital switchover has left an equilibrium between the digital satellite, cable and terrestrial platforms that is not expected to alter significantly by 2020. The main anticipated change over the forecast period is pay-TV subscription take-up where the 50/50 split between pay and free TV households is expected to rise steadily to 60/40, or even 67/33 if we include more individually-, as opposed to household-, based OTT online services such as Netflix, LoveFilm or Sky's NOW TV. Most of the pay-TV subscription growth will occur at the lower end of the price range among BT Vision and TalkTalk customers, where the popularity and success of YouView will be critical in driving subscriber growth as TiVo has been and will be to Virgin Media holding its ground.
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April 28, 2013
Google's US and EU antitrust cases: 1:0 Google
ReportsIn January 2013, the US Federal Trade Commission (FTC) cleared Google of anticompetitive practices in its core search and advertising business a corresponding European antitrust investigation is pending, but looks set to take a (slightly) stricter stance on Google. The FTC's closing of the search bias investigation is key to Google's strategy to integrate and expand its general and vertical search products, such as its e-commerce channels Google Shopping and Google Maps, with direct positive revenue implications. The European Commission will most likely not impose search bias remedies later this year that significantly impact Google's current practices, and we therefore have a positive outlook on additional vertical search revenues materialising.
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April 28, 2013Apple, price and market share
ReportsApple's numbers have got so good they're bad: after growing at over 50% for two years, relative revenue growth has, inevitably, slowed. The products remain very strong, and direct competitors continue to have little impact. (Apple's mobile phone market share has never been higher, for example.) However, the premium phone market itself, which the iPhone dominates, is at a potential tipping point.
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April 10, 2013
Facebook Home and mobile
ReportsFacebook has announced Home, an Android app that takes control of your phone, replaces the home screen with your Facebook newsfeed and relegates any competing social services to, it hopes, an afterthought. At launch, Home will be available to at most 20% of Facebook's mobile base. It is an interesting tool to lock in core users and drive up their engagement, but can only be part of Facebook's mobile strategy. Facebook has strong mobile user and revenue growth, but has not won' social on mobile as it has on the desktop, and competing services have drawn hundreds of millions of users. It is not yet clear Facebook will win, or even that there will be a single big winner.
