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    May 20, 2019

    Disney gets the final piece of Hulu

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    Disney announced that it would acquire Comcast’s 33% share of Hulu in a put/call agreement that can be enacted by either party from January 2024, while taking full operational control of the vehicle immediately. Under the agreement Disney will pay Comcast a minimum of $9 billion for its current stake, provided Comcast fulfils agreed capital calls, which going forward would be just over $500 million/year. Disney secured the continued licensing of NBCUniversal content for Hulu, contributing about 30% of Hulu’s library, but Comcast can loosen obligations to Hulu for the launch of its own SVOD service in 2020.
  • May 13, 2019

    Sky UK Q1 2019 results: weak ARPU hits bottom line

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    Sky made a surprisingly weak start to 2019, with revenue growth decelerating to 1.9% (the first time below 4% since the European businesses merged in 2015), due to weaker ARPU trends. However, Sky expects improvement to follow, blaming one-off factors in the quarter. The ARPU weakness drove EBITDA down 11.3%, but this should bounce back across the rest of 2019 as football rights costs turn from a drag to a positive. Comcast highlighted collaborations with Sky across tech, advertising, content distribution and even news, stating it is on track to achieve the anticipated $500 million in annual synergies over the next couple of years
  • May 2, 2019

    The new lifespan of UK TV content: wearing out more quickly

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    The economic model of TV production relies upon a vibrant market for back catalogue content; programming that has traditionally driven the desirability of many linear channels and slots. New release strategies, along with the hyper-concentrated viewing encouraged by video-on-demand and the round-the-clock availability of shows calls the longevity of the value of content into question. Our analysis suggests that programmes that previously would be leisurely distributed through broadcast could now feasibly be “worn out” more quickly. This could have ramifications for the whole sector, with more content investment required “upfront” and new financial and distribution models required.
  • April 5, 2019

    Apple’s showtime: everybody gets a service, partners get pennie [...]

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    ­­­­Apple is strengthening its household model by doubling down on family-friendly content subscriptions and payments. The model is reliant on hard bargains with mainly US partners, which risks sacrificing potential scale for a short-term boost in margin dollars. The new services offer glimpses of novel concepts, but stop short of taking risks to truly differentiate—a problem in TV, where Apple’s distribution advantage is slimmer than Oprah would have it.
  • April 4, 2019

    BBC Studios and Discovery in the UK: a new SVOD and the UKTV spli [...]

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    The split of UKTV has been announced with the lifestyle channels going to Discovery, while the balance, along with the UKTV brand and VOD service, retained by the BBC, costing BBC Studios £173 million. In the same release, a new, global Discovery SVOD “powered” by BBC natural history and factual programming was announced, backed by a ten-year content partnership. The deal is a positive step for the BBC, which safeguards against flaky brand attribution internationally and the potential loss of revenues from Netflix, which is becoming more choosy when acquiring content.
  • March 22, 2019

    BritBox’s muted arrival in the UK: ITV FY 2018 results

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    After the heights that Love Island and the World Cup took ITV to in H1, the broadcaster held on over the tougher last few months of 2018 to see growth in ad revenue (0.8%) and total viewing (linear and VOD, 3%). However, it was the announcement of the subscription video service BritBox—with the discussions around the “strategic partnership” with the BBC in its concluding phase—that garnered most interest. ITV’s investment in the service is modest when compared to its global competitors—up to £25 million in 2019, £40 million in 2020 and declining thereafter—but it is a prudent low-risk entry into what is an expanding but difficult market.
  • March 12, 2019

    The future of UK video viewing: forecasts to 2028

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    Linear TV is still a mass market medium, watched by 90% of the UK population each week. However, our latest viewing forecasts predict broadcasters will account for two-thirds of all video viewing in 2028, down from c. 80% today, due to the relentless rise of online video services. Total viewing will continue to increase as more short-form content is squeezed into people’s days, particularly on portable devices, but the key battleground for eyeballs will remain the TV screen. The online shift has already had a huge impact among younger age groups, with only 55% of under-35s’ current viewing to broadcasters. Older audiences are slowly starting to follow suit, but have a long way to go.
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  • February 22, 2019

    Time to create an addressable UK TV market

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    Addressable linear TV advertising, where precision-targeted ads overlay default linear ads, could enhance the TV proposition for advertisers, agencies and viewers, benefiting all broadcasters. In the context of dwindling linear viewing and rocketing online video ad spends, the adoption of Sky AdSmart and similar services on YouView and Freeview could take addressable TV ads from a sideshow to a pillar of revenue. Addressable linear is a bigger and more strategic prize for broadcasters than BVOD ads. Sky holds the key to wider adoption of its AdSmart platform if it can find a way – or a price – to bring ITV Sales and/or 4 Sales on board.
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  • February 15, 2019

    European pay-TV: Resilient in the face of SVOD’s growth

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    Across the EU4, pay-TV is proving resilient in the face of fast growing Netflix (with Amazon trailing), confirming the catalysts of cord-cutting in the US are not present on this side of the Atlantic. Domestic SVOD has little traction so far. France's pay-TV market seems likely to see consolidation. Meanwhile, Germany's OTT sector is ebullient, with incumbents bringing an array of new or enhanced offers to market. Italy has been left with a sole major pay-TV platform—Sky—following Mediaset's withdrawal, while Spain's providers, by and large, are enjoying continued growth in subscriptions driven by converged bundles and discounts.
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  • February 11, 2019

    UK TV set viewing trends: linear audiences tumble in 2018

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    2018 was another bad year for traditional TV set viewing of broadcast channels, with a 5% decline year-on-year—its steepest since 2011. The decline accelerated among most demographics, but particularly for 16-34s, down 13% YOY from their already relatively low levels of TV viewing. Unmatched use, which includes viewing to Netflix, Amazon and YouTube, continues to grow, up 16% YOY, with both linear viewing and unmatched use becoming increasingly solitary activities. While heavier linear TV viewers are accounting for a greater proportion of linear TV viewing, it is the lighter TV viewers that are accounting for a greater proportion of unmatched use. Within the broadcast ecosystem, ITV had the strongest 2018 thanks to the FIFA World Cup, more Coronation Street, and Love Island. Most other broadcasters struggled in terms of viewing share, but the maturity of the market means major shifts continue to be rare.
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  • February 1, 2019

    Netflix’s local content push in the UK

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    With the UK perhaps Netflix’s most valuable market outside the US—home to a stellar production sector—the streaming service is escalating its foray into local production, opening a content hub in London and moving from co-productions to direct commissions. As UK content completely dominates UK video viewing outside of the SVODs, to expand subscription reach Netflix is endeavouring to become an alternative to the PSBs’ entertainment output; this local spend is efficient given the universality and worldwide appetite for British content. With a growing proportion of local content expenditure now coming from Netflix and other SVODs, there are ramifications for both broadcasters and producers—loss of viewing, potential market pressure, increased competition for premium content and hesitancy around their own SVOD plans—along with implications for the cultural landscape.
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  • January 21, 2019

    UK advertising spend: Brexit year forecasts

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    Our central case forecast with orderly EU withdrawal predicts 2.7% growth for total UK advertising spend, down from 4.7% in 2018. We have a no-deal Brexit scenario that predicts a smaller advertising recession than in 2009, with total ad spend declining 3% and display down 5.3% in 2019. The total advertising figures partly mask the pressure on UK consumers, through an expansion of the measured advertising spend universe. This is due to significant self-serve online advertising growth by SMEs, and non-advertising marketing budgets moving to online advertising platforms. In a downturn, we’d expect advertisers to become more tactical, which would disproportionally affect display media including TV, which is further affected by declining commercial impacts among younger adults. Search and social advertising would see only small growth through the first year of a recession.
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  • January 11, 2019

    Scandinavian video

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    The Scandinavian markets sit at the cutting edge of the TV industry’s evolution—a product of tech-savvy citizens, superb connectivity, and generally high incomes. Take-up of SVOD is high, yet while this has had a pronounced effect on viewing, pay-TV subscription numbers have proved surprisingly resilient. Traditionally dominant public service broadcasters are under greater financial and political pressures, with the licence fee scrapped in both Denmark and Sweden.      
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  • December 12, 2018

    UK TV advertising and consumer health check in Q4 2018

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    Despite the consumer's confidence having been shaken since the referendum vote for Brexit in June 2016, monthly retail sales, especially online, managed to grow above the private consumption trend until this October, a turning point that could mark the start of a retail recession extending into 2019. Since mid-2016, TV advertising and retailing have lost their historical covariance, with TV advertising's recession briefly interrupted in the first half of the year due to sunny weather and the FIFA World Cup. After a flat Q3, we predict a resumption of TV advertising's decline, expected to be down 3-4% in Q4 2018 year-on-year. 2018 will be flat for total TV advertising, still better than 2017. However, the medium's weakness will persist in the first half of 2019, with hopes for a recovery only in the second half, assuming an orderly withdrawal from the EU starts in March 2019.
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  • December 11, 2018

    Hulu casts a spell

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    When its acquisition of 21st Century Fox closes, Disney will own 60% of Hulu. If it bought Comcast’s 30% stake (and WarnerMedia’s 10%), it could fully leverage the platform for its US direct-to-consumer strategy. Comcast’s Hulu stake has little strategic value to it. We argue it should sell to Disney in exchange for long-term supply deals for ESPN, as well as for the upcoming Disney+ and Hulu, similar to its recent pacts with Amazon Prime and Netflix. This could naturally be extended to Sky in Europe depending on whether Disney decides to launch all direct-to-consumer or sticks with pay-TV in certain markets.
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  • November 13, 2018

    BBC drama: a loosening grip

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    A string of big, bold hits like Bodyguard, Killing Eve and Little Drummer Girl has reinvigorated the perception of the BBC’s drama schedule, with massive ratings and a coveted place in the public conversation. However, the lack of the broadcaster’s top dramas actually produced by BBC Studios—declining to just 4 of the top 25 in 2018—is cause for ongoing concern. At a time when the BBC is attempting to bulk up the iPlayer and programme IP has become the bedrock broadcasting asset, the BBC could be better placed.
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  • October 25, 2018

    Disney, Fox, Sky and Comcast: future relationships

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    With Comcast’s acquisition of Sky confirmed and Disney’s acquisition of 21st Century Fox on the path to regulatory clearance, how will the relationships of the various parties evolve?. Disney is betting on a standalone SVOD service in the US. However, its content deal with Sky in Europe is lucrative, and the performance of DisneyLife in the UK suggests its US strategy may not fit elsewhere. Sky’s relationships with Disney and Fox are crucial to its business. A joint pursuit to maximise returns from IP and distribution in Europe would be economically efficient for both Comcast/Sky and Disney/Fox.
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  • October 11, 2018

    UK Esports & broadcasters: No game for old players

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    Drawn by its rapid growth and enviably youthful audience profile, incumbent broadcasters are paying increased attention to esports and its followers. Viewership of esports on UK broadcasters’ linear channels is low, with consumption on their online platforms likely the same. The market’s fragmented nature and global audience, along with the dominance of Twitch—and to a lesser extent YouTube—makes this unlikely to change. Broadcasters’ low-cost approach has primarily benefited competition organisers and games publishers. For broadcasters to create real revenues, massive upfront investment would be needed, with the risk of failure high.
  • October 3, 2018

    What Sky means for Comcast

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    Comcast’s £30.6 billion acquisition of Sky brings to an end the long-running ownership battle since Disney agreed to tender Fox’s 39% stake to Comcast, also ending the Murdoch Family Trust’s interest in Sky. Comcast’s US domestic cable and global NBCU media businesses complement Sky’s European operation. Sky’s telecoms business is likely to expand, while the TV side should benefit from NBCU’s global distribution might, with greater revenues generated by its original content. Fox’s long-running battle with UK regulators over the public interest dimensions of the proposed Sky acquisition has also ended. Plurality of media is preserved by Comcast’s undertakings to support Sky News for 10 years.
  • August 21, 2018

    Regulating harmful video content and advertising online: Publishe [...]

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    Video-sharing platforms, such as YouTube and Facebook video, enjoy a light-touch regulatory regime for harmful content and advertising. As video viewing of non-broadcaster content grows, the regulatory gap between TV broadcasters and video-sharing platforms widens, part of a broader uneven playing field for publishers and platforms. However, there is momentum against this: the “platforms vs publishers” divide looks set to weaken in EU law, and the platforms themselves are investing more in combatting harmful content within a self-regulatory regime, though their internal policies and outcomes are still opaque. Effective and fair regulation of video-sharing platforms would involve the balancing of national freedom of speech conventions and the public utility of user-generated video hosting with concerned stakeholder views: something approaching a co-regulatory system for online video-sharing platforms.  
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  • August 20, 2018

    Sky UK 2017/18 full year results: Winning the game of content

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    Sky maintained strong revenue growth of 5% in 2017/18, with EBITDA and operating profit both bouncing back into strong positive territory after the UK Premier League rights hit of 2016/17. The UK grew revenue well and profits better; Italy performed well and should improve much further given the retreat of its principal competitor; Germany is more challenged, but extra content investment may aid sustained growth. Sky is proving adept at managing content costs and revenue in a changing environment, with investment, cost control and monetisation all being put to effective use as the content type demands it.  
  • July 20, 2018

    Focus back on ARPU: TalkTalk Group Q1 2018/19 results

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    TalkTalk had another strong quarter for broadband net adds, adding 80k versus its full year target of 150k+. All of this was due to strong wholesale, with retail net adds slightly negative, although in the market and seasonal context even this retail performance is quite respectable. On-net revenue growth improved strongly to around 4%, with its ARPU decline moderating to 2%, and ARPU should be helped further by price increases for existing and new customers alike in July. TalkTalk therefore looks well placed to hit full year targets, albeit with considerable help from its wholesale customers and some aggressive price increases. The focus back onto ARPU and away from (expensively) chasing retail subscriber growth is nonetheless to be applauded.  
  • July 18, 2018

    Video viewing forecasts to 2027: No channels and everything to wa [...]

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    Video consumption will continue to shift to on-demand driven by high quality content and a better user experience. Is live TV dead? Is Netflix the future of TV? We address these questions and more in this report on the future of video consumption in Australia  
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  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    July 13, 2018

    UK TV platform forecasts to 2022: stability rules

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    Despite significant changes in people’s video viewing habits over the last few years, the TV platform landscape has appeared to reach an equilibrium. We expect pay-TV to retain its utility status for most existing customers. At the margins, movement from Sky and Virgin Media to free-to-air or pay-lite services will be mitigated by population growth. The excitable growth phases for Netflix and Amazon are likely to be over, but they have carved out prominent positions in the market. Meanwhile, the uncomplicated allure of free TV remains strong for half the UK.
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