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  • September 28, 2016

    Clash of the retail titans: Amazon vs Walmart

    The battle in the US between Amazon, ecommerce giant, and Walmart, the retail titan, reflects the changing face of US retail as online drives growth. Amazon, the everything store, innovates on marketplace, warehouse and logistics, and customer tools like Prime, while Walmart fortifies in-store and builds on its strengths. Walmart cannot overtake Amazon online, but it can defend its position as the largest US retailer as Amazon drives an ecommerce future for retailing.

  • 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 8, 2016

    Telecommunications Market Outlook

    The scale and pace of consolidation has been a major theme within the telecommunications market over the past few years. Consolidation is now coming to the end of an era and the market is entering into a new phase of competition. We discuss these changes along with the current and future market trends, key market players, and ways in which businesses remain dominant in the ever-changing market place.

  • 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 23, 2016

    UK broadband, telephony and pay TV trends Q2 2016

    UK residential communications market revenue growth was broadly unchanged at 5% in Q2, despite volume growth continuing to slow across all products, with pricing and fibre adoption helping to boost ARPU. Virgin Media continued to gain momentum on the back of its Project Lightning network extension, and this impact is likely to continue to grow as the roll-out continues. Its ARPU was quite weak, hit by promotional discounting and other temporary factors, and this should recover in time, helped by its early price increase schedules for November.

     
  • August 15, 2016

    A third digital ad force: Verizon and Yahoo

    To diversify revenue in a saturated US mobile market, telecoms giant Verizon Communications followed an earlier merger with AOL by acquiring Yahoo for $4.8 billion. The combined online ad platforms are likely to become the most viable contender for third place in the US, after Google and Facebook. Verizon’s mobile subscriber data could narrow the market leaders’ targeting and measurement advantage, but regulation and customer reception pose risks.

  • August 12, 2016

    Channelling strength: Virgin Media Q2 2016 results

    Virgin Media had its strongest June quarter since 2008 with 43k broadband net adds (31% of market net adds), of which Project Lightning contributed less than half. Current momentum remains largely dual play with continuing, though stable, net losses in the TV base. Content investments, and an upgraded UI and STB will be at the centre of TV promotions as refreshed triple play bundles are launched towards the end of the year in a bid to reinvigorate premium pay TV competition. In a saturated premium pay TV market, base stabilisation should be the near term target.

  • Amazon Prime Air pilots in the UK
    Amazon Prime Air pilots in the UK
    August 11, 2016

    Amazon Prime Air pilots in the UK

    Amazon will test three possible features of their drone delivery system in the UK, which could make this novel shipping solution for small packages viable. When it launches, Prime Air will be limited to a catchment area of 2.3 million homes in the UK, with further exclusions for no-go areas for drones like airports and urban areas. Prime Air’s UK pilot will help the Civil Aviation Authority (CAA) craft the rules for future drone delivery by retailers.

  • August 5, 2016

    NBN plans — Jockeying for position

    With the NBN now available to one sixth of Australian households, telecommunication carriers are battling aggressively for market share in the post-NBN world.  Venture Insights has reviewed the NBN plans being offered by a cross-section of the five largest carriers to see what they tell us about the competitive landscape.

  • August 4, 2016

    Openreach: The Seventh Degree of Separation

    Ofcom’s latest proposal for the structure of BT’s Openreach sits neatly between BT’s offer and its competitors’ demands, and is broadly sensible if the Pension Fund and cost issues can be resolved. Ofcom has been under pressure from MPs, consumer groups, BT’s competitors and others to ‘sort out’ BT given its perceived under-investment, despite UK broadband consumer outcomes being the best among European peers on nearly all objective measures. Ofcom’s focus on separation is therefore understandable, but we believe misplaced; while technical governance details are debated, BT’s share price (and hence ability to invest) languishes, and more concrete steps to give investment certainty get put on the back burner. Ofcom might be encouraging investment in theory, but not in practice.

  • 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 25, 2016

    Under pressure: TalkTalk Group Q1 2016/17 results

    TalkTalk reported net losses in broadband (-9k), with likely negative pressure on line rental, and weakness also in TV (-23k) although fibre (+36k) and mobile (+48k) net adds remained strong. Ahead of insight from competitor performances, the figures suggest a challenging quarter for the operator. Group revenue growth improved 1.3ppts to -0.4% owing to particularly strong carrier revenues, an inconsistent revenue stream. This was in spite of slowing consumer revenue growth (-1.2ppts to -2.5%) partly owing to cyber-attack related impacts.

  • 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

  • June 27, 2016

    Parents and their children online

    Cinema, TV and VOD services share the same ratings regime in the UK, giving parents confidence they can discern content unsuitable for their children. Risks to children of being exposed to unsuitable content and advertising multiply on the ‘open’ internet.
  • June 23, 2016

    UK mobile user survey 2015

    Our survey results highlighted disconnects between operator ambition and consumer perceptions across customer loyalty, network performance and quad play, with noteworthy implications for future competitive performance. O2 in particular benefited from strong branding which yielded network confidence and loyalty above that of top network investors, EE and Vodafone. Convergence prospects continue to look supplier driven with consumers reporting little interest in quad play packages even when offered with significant bundle discounts. Recent advertising campaigns have sought to change consumer perceptions of a dichotomy in mobile and fixed broadband provisioning which, if successful, will be to the benefit of all quad play hopefuls. The mobile usage disparities between 16-24 year olds and 55+ users are stark, for instance near 100% of mobile users aged 16-24 own a smartphone while for those 55+, this falls to just over half. The implications are strong for service providers in all manner of industries who are seeing new (younger) users come to market that bear little resemblance to the traditional users around whom much of the operational model is typically built.

  • June 22, 2016

    Consumers and digital marketing – Challenges and tensions a [...]

    UK digital advertising will grow beyond £10 billion by 2018 by our estimates, representing more than half of all advertising spend and delivering the most advanced large advertising market in the world on a per capita basis. Nevertheless, we see critical issues in digital marketing that are frequently acknowledged, but hard to fix. At the heart of our hypothesis is the view that the marketing industry – brands, agencies and media – has focused on technology and efficiencies at the expense of consumer experience and distinctiveness.
  • May 26, 2016

    Google Home takes on Amazon Echo

    Google Home will compete against ­­­­Amazon’s Echo in the contest to supply voice-activated home hubs to US homes.Google claims Home is better at voice-based search due to its superior capabilities; pricing is unknown, but is likely to be at par with Echo ($179).Prime, Fire devices and media services are competitive advantages for Amazon in the US that will make it hard for Google Home to succeed there.

  • May 24, 2016

    Onwards and upwards: TalkTalk Group Q4 2015/16 results

    TalkTalk Q4 2015/16 results firmly indicated that operations had moved on from the cyber-attack; record low churn and strong mobile (+90k) and fibre (+72k) traction with stable gross adds were all in line with the revised strategy announced last quarter and marked the best net adds performance for the year. Wholesale subscriber net adds (+49k) were critical to on-net base stability against retail net losses (-49k), highlighting the short term value of wholesaling as a hedge against heightened (and expensive) retail competition although long term sustainability will rely on traction in retail. FY17 guidance targets EBITDA of £320-360m, with an implied 17-20% margin (+3-6ppts on FY16), which is accessible from MTTS projections, lost costs from revised trading plans, and lower CPAs before counting revenue growth contributions. The operating cost impact from blinkbox, York fibre and other new cost structures appears benign for the moment.
  • May 24, 2016

    Vodafone Q4 2015/16 results: Positive growth in Europe

    Vodafone Europe’s service revenue growth reached positive territory in the March quarter, having recovered from a long term decline that it has suffered since 2009, thanks mainly to market stabilisation within the countries where it operates. The company’s service revenues are now growing in Germany, Italy and Spain, with the UK now the laggard, having suffered from recent billing migration issues. With Europe’s major mobile markets now stabilised, Vodafone’s continued high investment levels gives it an opportunity to develop a competitive advantage and outperform its competitors, rather than just keeping up with them.

  • May 17, 2016

    Expanding and upgrading: Virgin Media Q1 2016 results

    Virgin Media broadband net adds of 70k were the highest in 6 years, with record market net adds share of 35% in a slowing broadband market, and the strongest consumer cable revenue growth in over a year. Project Lightning roll-out and strong marketing were the key drivers and are expected to continue over the year. Recent momentum has been largely dual play driven but TV investments, including exclusive on demand content, and a software upgrade and refreshed set top box to be launched in H2 2016, should help with ongoing TV net losses particularly as cost pressures mount from wholesale sports content. Project Lightning updates informed that of the 4m total premises budgeted for network expansion to 2020, at least 25% of these will be connected via FTTP, signalling increased infrastructure competition with Openreach whose G.fast roll-out plans potentially diminish the current cable network speed advantage (though further cable upgrades are both possible and would recover this).
  • May 13, 2016

    BT Q4 2015/16 results: Sound investment-driven growth strategy

    BT Group’s revenue growth slipped back to 1.3% in Q4, but this reflected the reversal of various one-off boosts in the previous quarter, with underlying trends still solid across the group, with Consumer and Openreach still the standout performers. We do not think that BT’s approach of keeping the BT and EE consumer brands separate will maximize the cross-selling opportunity, but we consider this opportunity to be modest at best in any case, and therefore not worth the risk of a disruptive integration. On both fixed and mobile, BT is using cost savings to invest in faster speeds, better coverage and improved service to drive competitive advantage and price premia, a very sound strategy in our view.
  • April 20, 2016

    Sky’s German breakeven hangs on Bundesliga auction

    At present, Sky exclusively holds all pay-TV domestic live rights to Germany’s top football league. The 2017-2021 rights auction will conclude in early June. It contains a new soft ‘no single buyer’ clause referring solely to online rights. Sky’s real threat comes from potential bids for the main TV packages by deep-pocketed telecom or digital platforms. This could see Sky losing games and shouldering significant cost increases. We think Sky’s German operations will break even by fiscal 2017. Beyond this, profitability is heavily dependent on the auction’s outcome. If it were to retain all live rights, Sky could afford to increase Bundesliga costs by up to 40% over the four-year period. Anything beyond this would lead to Sky making losses.