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  • 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.    
  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    December 12, 2017

    Children’s changing video habits:And implications for the conte [...]

    Children’s media use and attitudes have dramatically changed over the last few years, stemming from the rapid take-up of smartphones and tablets. Traditional TV continues to decline at the expense of newer video services such as YouTube, Netflix and Amazon, with 43% of children aged 8-15 preferring YouTube videos over TV programmes.These online services offer content producers wider opportunities, but questions remain around the lack of regulation online, and the recent scandal around children’s safety on YouTube has heightened these concerns.
  • December 5, 2017

    Channel 5: three years on from Viacom’s acquisition

    Viacom’s 2014 acquisition of Channel 5 from Richard Desmond’s Northern & Shell occurred while the maelstrom encircling linear television viewing—sparked by the allure of SVODs and other digital distractions—was well underway. Nevertheless, with increased content spend, development of new titles and clarity as to its targeted audience, the broadcaster has increased its channel (and group) share amongst 16-34s and ABC1s, and has directed further benefits back to its owner's existing entertainment suite. Outside of the post-lunch and 8-10pm slots, however, work needs to be done: Channel 5’s BVOD proposition and social media offering leaves much to be desired, while the reliance on two major titles, Big Brother and Neighbours will be unsustainable in a post-linear world.
  • December 1, 2017

    UK TV set viewing trends

    BARB data indicates that the amount of average daily TV set viewing to linear TV channels is continuing to fall: the pie is shrinking. Just under 20% of TV set usage so far in 2017 is to non-linear activity, and viewing to SVOD services and YouTube is likely to account for most of this growth in 'unmatched' viewing. The pie is shrinking faster amongst younger audiences: just under one third of TV set usage is 'unmatched' now for 16-34s. However 35+ unmatched use is growing at a faster rate than 16-34 unmatched use in 2017. Within this smaller pie, the PSB channels continue to hold share of viewing against pay channels. Within the PSBs, ITV and the ITV digital channel family have gained most share so far this year, although BBC1 is having a strong autumn in spite of the loss of Great British Bake Off to C4.
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  • November 13, 2017

    BT Q2 2017/18 results: Unresolved issues

    BT Group revenue growth dipped to -1.5% from an instance of rare modest positive growth in the previous quarter, albeit mostly due to a predicted price timing effect in Consumer and revenue growth predictably going from bad to worse in Global Services. The bright spots were continued strong 4% revenue growth at EE, with an acceleration in mobile-related revenue also helping other divisions, and strong growth of 5% in external revenues at Openreach driven by accelerating fibre adoption by competitor customers. A number of very important regulatory/policy/legal issues remain unresolved, including 5G spectrum auction rules, leased line pricing, FTTC pricing and FTTP roll-out rules, but without a number of these going BT’s way the outlook remains tough for at least the next 18 months
  • November 13, 2017

    PSB: Working with the frenemy

    Public service broadcasting (PSB) and the entire unique broadcasting ecosystem face huge challenges from global tech giants with deep pockets, data insights and scant regard for PSB prominence. All three pillars of the PSB model are threatened: content supply, distribution and advertising. The further threat of digital terrestrial TV (DTT) spectrum being reduced or turned off in c.2030 is real and PSBs must have a migration path in place. PSBs can counter some challenges through increased investment in content relevant to the UK consumer. But, recognising the aligned interests with pay-TV platforms of Sky and Virgin Media, collaboration between the parties is integral to the long-term future of PSB
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  • November 8, 2017

    Premier League: winner’s curse

    The Premier league (PL) will be hoping for another huge increase in rights payments in the upcoming auction for the three seasons starting 2019/20. Aggressive competition between BT Sport and Sky has led to hyperinflation of most premium sports rights. Sport now accounts for two thirds of multichannel content spend, but only 8% of its viewing. BT’s current financial position makes it difficult to justify expansion or further hyperinflation of its PL rights portfolio, but it cannot withdraw completely
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