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  • 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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  • July 12, 2018

    Virtual Reality in 2018: Ready Player None?

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    Yet another annual hype cycle in 2018 can’t hide a tepid consumer appetite for all VR platforms and heavy weather for the industry as a whole. The launch of Oculus GO, a standalone device at an attractive price, is a milestone for VR; nevertheless, even Facebook remains worried about reach and the state of the industry. Mobile AR is still a strategic focus for Google and Apple, producing diverse applications instead of just games, but new headsets from Microsoft and Magic Leap which promise advanced MR experiences have no launch dates.
  • June 19, 2018

    Advertising after the turning point: When offline is the exceptio [...]

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    Online advertising became the majority of all UK ad spend last year, in step with China but ahead of all other major markets. Direct response has further increased its share to 54% of UK ad spend, fuelled by the self-serve platforms of Google, Facebook and Amazon, while content media nets just 11% of the online advertising pot. We estimate that all online-delivered channels - including "pure play" online properties, broadcaster VOD, digital out-of-home and online radio - could account for well over 60% of UK ad spend by 2020, but only with improved commitment to industry governance.
  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    June 11, 2018

    Disruption in Premier League football? 2018 auction finally over

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    The latest auction of live Premier League broadcast rights commencing in 2019/20 has concluded at last, with three different winners for the first time. The total sum has not been confirmed, but it looks to be down c. 10% from the previous auction at £1.55 billion per season—still substantial, and not far off the BBC’s entire TV content budget. As we predicted, Sky and BT remain dominant, winning 180 of the 200 games per season, whilst new entrant Amazon picked up one of the leftover packages at what looks to be a very low price.  
  • May 14, 2018

    Video viewing forecasts to 2027: continued divergence by age grou [...]

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    Our latest forecasts predict traditional broadcasters will account for 72% of all video viewing in 2027, down from an estimated 82% in 2017, reflecting the continuing adoption of online video services across all UK age groups. Additional viewing of online short-form content such as YouTube will keep pushing overall volumes higher, with SVOD services serving more as a substitution for linear TV. The extent will be greater among younger age groups, for whom the shift has already been significant. We predict that in 10 years just 42% of 16-34s’ total viewing will be to conventional broadcasters versus 91% for the over-55s.      
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  • May 1, 2018

    Sky Q3 2017/18 results: ever more attractive

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    Sky posted yet another set of solid results, with revenues up 5% and operating profits up 10%, despite weakening operating metrics in Germany & Austria. Deals with Netflix and Spotify will enhance the customer experience, signalling Sky's confidence in its platform, perhaps a sign of further deals to come. A successful outcome from February’s Premier League auction sealed the prospect of a takeover battle for Sky, with Comcast launching its formal bid this week.
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  • April 27, 2018

    Brexit Update: Domestic Issues

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    Despite apparent instability of the political climate in Westminster, the direction of travel is predictable as both main parties share the aim of Brexit. The big fight in Parliament is over the future trade policy of the UK. Officially, the UK wants to agree a Free Trade Area (FTA) with the EU, while the Labour Party and Tory rebels hope a Customs Union (CU) prevails, binding the UK to the EU’s trade policy. The Supreme Court is about to hear the UK Government’s challenge to legislation passed by the devolved nations of Scotland and Wales, which claim their consent is required for policies on agriculture, fisheries and the environment.
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  • April 19, 2018

    Fox offers sale of Sky News to clear merger

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    The Competition and Markets Authority (CMA) will report on the public interest (PI) aspects of the Fox/Sky merger on 1 May to Secretary of State (SoS) Matt Hancock, who will announce his decision on 13 June to the Commons. Fox has offered to sell Sky News to Disney, which will prevent the Murdoch family from ever exercising control or influence and might appease opponents of the merger. The CMA is likely to advise the SoS to clear the merger, conditional on the Sky News sale to Disney, which the SoS could accept. Fox will then participate in the end-game for Sky, where Comcast is also a determined bidder.
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  • April 12, 2018

    TV set viewing trends: ‘Unmatched’ viewing growth and cha [...]

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    Despite the continued decline of linear TV set viewing through 2017 (-4%) and the first 12 weeks of 2018 (-3%), overall TV set usage remains flat at 4 hours/day due to the continued rise of unmatched activities (+19% in both cases). We consider the recent growth of unmatched use to be predominantly due to viewing of online-only services (i.e. Netflix, Amazon and YouTube), since time spent gaming is unlikely to have changed dramatically. The increase in unmatched usage since 2014 exceeds the total viewing to the most-watched broadcast channels for all age groups under 35. Within the shrinking pie of consolidated TV set viewing, market shares remain broadly flat. However, several key digital channels have shown surprising signs of recent decline, reflecting stalling growth from the multichannel long tail versus the main PSB channels.
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  • March 27, 2018

    OK Google: The rise of Voice Assistants in Australia

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    The rapid growth in voice search technologies and the increasing penetration of Digital Voice Assistants indicates that voice search is fast emerging as a significant computing platform with the potential for a direct-to-consumer relationship.
  • March 26, 2018

    UK – ITV FY 2017 results: glass half full?

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    In her first results appearance as the new CEO of ITV, Dame Carolyn McCall announced a fairly good full year performance in the face of 2017’s tough ad market, with NAR and Group EBITA both down 5%. The main announcement was the start of a strategic refresh. For now, this is light on detail, but with more to come at the H1 interims. The bottom line is to improve all areas of the business through greater use of data. Under the looming threat of tech giants, increased calls for collaboration—with content producers, advertisers, and other broadcasters and platforms—could spur more tangible opportunities for significant growth in the UK public service broadcasting system.
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  • March 23, 2018

    YouTube: thinking beyond the long tail

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    Engineering excellence and user generated content (UGC) have propelled YouTube to Facebook-level reach, with growing viewing in all demographics and on the TV-set. However, the commercial limits and PR risk of its long-tail content model have prompted a diversification effort involving subscriptions and long-form content. Becoming a major part of Google’s revenue amid fierce OTT competition would require YouTube to be more flexible in its partnerships with the AV industry, and a more aggressive go-to-market strategy.
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  • March 15, 2018

    BBC Worldwide considers the rest of UKTV

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    A change of control clause triggered by Discovery’s takeover of Scripps will grant BBC Worldwide the option to acquire the 50% of UKTV that it does not already own. With a possible price in the vicinity of the £339 million paid by Scripps in 2011 it is by no means certain that BBCW could proceed alone—so a new, minority partner may well be necessary. Discovery, on the other hand, may be keen to acquire full ownership of UKTV, while retaining a licensing arrangement for the BBC’s content. A channel portfolio containing the best of Discovery, Scripps and UKTV content built on UKTV’s strong EPG positions would transform Discovery in the UK.
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  • The Internet of All Things - Towards the Hyper-connected World
    The Internet of All Things - Towards the Hyper-connected World
    March 6, 2018

    UK Internet Trends H2 2017: From shallow online to the online imm [...]

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    In this report we develop a rough segmentation of the adult population by level of online use: offline (10% of adults), shallow online (10%), deep online (80%). We examine how online services seeking to reach new audiences increasingly face the obstacle of missing demand rather than a lack of consumer skills or access. The app economy still relies on a limited consumer pool, but ecommerce is now reaching almost all of the deep online. Bridging the current gap between occasional and frequent online buyers is a clear opportunity and we are still in the early days of evolving buying services into shopping services. The only industry monetising all online users is advertising. Ad platforms, led by Google and Facebook, also play a critical role expanding the ranks of the deep online and online immersed. But offline brand display media, led by broadcast TV, remain critical for online brands wanting to expand their audience.
  • March 2, 2018

    UK broadband, telephony and pay TV trends Q4 2017

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    UK residential communications market revenue growth fell again to 1.2%, with weakening ARPU growth the main driver. New customer pricing remains flat to down, and existing customers are being increasingly discounted, fuelling the ARPU weakness. High speed broadband adoption is proceeding apace, but the high speed premium is fairly thin, muting the impact on ARPU. Regulated wholesale price cuts from Openreach finalised today and due in April 2018 will not help. Looking forward, the March quarter will benefit from price timing effects at BT and Virgin Media, but we fear that the rest of 2018 will follow the current downward trend and the operators will need to adjust to an ex-growth environment.
  • February 14, 2018

    Sky H1 2017/18 results: Solid platform, questions on content

    Sky H1 results were very solid, maintaining 5% revenue growth and 10% EBITDA growth, with Sky continuing to support a widening product portfolio and more expensive core products with strong cost control and execution. Subscriber volume growth was a little weak at the margin, but this will be helped by all-IP products expanding the economically addressable base in new, and existing, markets. There remain questions on content, with the outlook for premium football rights uncertain in the UK and Italy, and investment in Originals questionable given a mixed track record, but certainly with upside
  • February 13, 2018

    Premier League auction: not ripe for GAFAN disruption

    The overall scale of the GAFAN digital media giants may be huge, but the cost of becoming a major player in Premier League (PL) football remains utterly disproportionate to the current scale and ambitions of their video businesses in the UK. Furthermore, the main package PL rights are live-only, UK-only, and of limited breadth of appeal, making a poor strategic fit for any of the digital players. The cheaper minor packages, near-live and clips rights may be a better fit, but bidding on these will not move the needle in terms of the £1.7 billion per year main PL auction rights costs.
  • February 5, 2018

    CMA issues provisional findings in Fox-Sky

    The Competition and Markets Authority (CMA) has provisionally found that Fox’s acquisition of Sky is against the public interest on media plurality grounds, although it could proceed with an appropriate remedy. The CMA found the merger would give the Murdoch Family Trust (MFT) and family members “too much influence over public opinion and the political agenda”. The CMA now enters the challenging remedies phase. Fox could offer an Editorial Board for Sky News pending finalisation of Disney-Fox (by 2019). Third parties seem likely to continue to seek to prohibit the merger
  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    February 1, 2018

    Serie A’s 2018-21 auction morphs into telenovela

    The Italian league, unhappy with broadcasters’ bids of €830m, are now holding talks with Spain’s Mediapro, who has offered €950m and would produce a channel to wholesale to all platforms. Mediapro’s bid faces challenging economics given the low potential for an OTT strategy and Sky’s exclusive possession of a sufficiently monetisable subscriber base. Ultimately, we expect Sky to continue its full coverage and to increase its outlay only if it gains more exclusive fixtures
  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    January 11, 2018

    Italy’s Serie A desperately fighting football rights deflation

    Results of the league’s new call for tender for its 2018-21 broadcasting rights will be unveiled on 22 January. The platform-based packaging was reviewed after last year’s aborted auction, apparently to accommodate loss-making Mediaset Premium, the participation of which remains nevertheless uncertain. Sky could keep its current satellite and internet coverage without increasing its outlay. We expect no major Telecom Italia (TI) or GAFA bid. Serie A seeks an unrealistic €1.05 billion per year (up 24%). If the auction results fall short, it hopes to sell rights to financial investors or, in a last resort, to launch its own channel – both ideas smacking of recklessness
  • January 10, 2018

    Premier League auction developments: more is less

    BT and Sky’s content cross-wholesaling deal much reduces their risks of losing packages in the upcoming Premier League auction, with most of the strategic platform value of exclusive sports rights now wiped out. The PL auction structure offers more games but less value, with the two smaller packages particularly unattractive, which cleverly nudges BT to retain a more expensive package, and thus most of its spending, if it wishes to downsize. While demand from all potential rights buyers appears weak, paying less money to retain the same position will be challenging for the incumbents Sky and BT given high minimum package prices, with courage necessary to force these minimums to be reassessed
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  • January 9, 2018

    Video on demand insights: Netflix, Amazon and the iPlayer

    Even with the decline in linear television viewing, online video remains a small component of total video consumption. The growth area is unsurprisingly SVOD; subscription video now makes up about two thirds of the UK's digital video spend. Netflix is moving from an aggregator of content to a "channel" in its own right, increasing proportionate spend on original programming, something that the public service broadcasters are unable to do for differing reasons. Amazon had a tough 2017 for video, and are still struggling to create a hit. New Nielsen audience data suggests that the long-term "library value" of Netflix's originals may be overstated, while the BBC's iPlayer continues to be hampered by not really having a library at all.