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  • 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 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.
  • June 14, 2016

    Sky plays long term with Bundesliga

    The award of the match packages in the 2017-21 domestic football rights auction in Germany is probably optimal for Sky (within the “no single buyer” constraint): it will broadcast about eight out of nine weekly fixtures including the top picks, while Eurosport’s package is complementary to Sky’s rather than substitutional. Sky will, however, pay a hefty price, with the new contract costing 80% more than the current one – although the new Bundesliga rights value is not out of line with other Continental leagues. We expect Sky’s German operations to briefly break even in fiscal 2017 before falling back into losses with a return to profit if other costs are kept under control. Management has made a bold statement of self-confidence: building scale is the priority.
  • May 16, 2016

    Facebook leans in to video

    Facebook has become the second largest online video platform after YouTube by viewing time, largely thanks to muted autoplay streams - for the moment. This is about to change as Facebook seeks to grow viewing and expand inventory with a new standalone video hub, live streams and revenue share models for professional content. Facebook’s lofty ambitions to become a destination for long-form, premium video content will be harder to achieve and less compatible with current strengths than for online news.
  • April 27, 2016

    Sky Q3 2015/16 results: Content scale is king

    Europe’s leading pay-TV operator Sky has extended its long run of strong quarterly results with revenues up 5% in the first nine months of 2016 and operating profits up 12% as Sky retains its intense focus on cost efficiencies and synergies across the group. The KPIs were largely very positive, though the churn uptick from a very low base in the UK & Ireland in recent quarters raises questions about the factors at play, while the one notable short-term uncertainty is the outcome of the Bundesliga auction during Q4. Of the big themes highlighted in the results release, Sky’s commitment to building major content partnerships at a European level stands out as it faces the growing online challenge from Netflix, Amazon et al.

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  • April 22, 2016

    Brexit risks for the creative industries

    A post-Brexit recession will cause a hyper-cyclical decline in the advertising revenues of broadcasters and publishers. The Vote Leave idea of the UK joining a free trade area for goods with the EU would sever UK access to the Single Market for services, damaging the export-reliant audiovisual group, among many other sectors of strength. Made-in-the-UK IT, software and computer consultancy services will lose eligibility for government procurement tenders once the UK is an outsider to the EU.
  • April 21, 2016

    UKTV viewing still on the rise: 2015 results

    2015 has been a very good year, with revenues up 13%, helped by buoyant market conditions, in which TV spot advertising revenues increased by 7%. EBITDA also increased by £8 million in spite of an extra £25 million spent on programming. 2015 saw UKTV overtake Sky to become the non-PSB channel group with the highest advertising Share of Commercial Impact (SOCI) delivery among adults 16+, while Q1 figures suggest the gap will widen in 2016. The horizon beyond 2016 is less clear as further revenue growth will rely much more on organic factors, in which respect UKTV’s online offering UKTV Play has much promising potential, if it can be realised.
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  • 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.

  • April 18, 2016

    Vivendi, Mediaset and the Latin strategy

    Vivendi is to acquire the main pay-TV division of Italy’s Mediaset in an all-share transaction, creating a ‘strategic alliance’ between the two groups. Each partner will own a 3.5% stake in the other. The deal is positive for Mediaset but the benefits for Vivendi can only accrue long term. Mediaset Premium claims two million subscribers and recorded €640 million revenue in 2015. However, EBIT losses amounted to €115 million and are likely to more than double through 2016 and beyond. The deal has no discernible impact on Premium’s bigger rival Sky. Vivendi and Mediaset will also jointly operate a ‘global’ online video platform and collectively develop content production and distribution. The pair’s respective assets are sizeable but domestically focused with little demonstrable international synergy.
  • April 14, 2016

    Away from home: The online challenge for PSBs

    On TV, UK public service broadcasters (PSBs) have operated within a privileged ecosystem; a guaranteed electronic programme guide (EPG) prominence placing their channels at the forefront, helping sustain their market share and spawning digital families. But technological changes within the TV set are eroding this prominence, and on devices, such structural advantages are non-existent. To confront dramatically falling mobile engagement, despite consistently excellent content, the PSBs need to collaborate and replicate their privileged linear position or they will struggle against the major SVOD players.
  • April 12, 2016

    Media & Telecoms – 2016 & Beyond

    Enders Analysis co-hosted its annual conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 8 March 2016. The event featured talks from 22 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts of the talks, and you will find accompanying slides for some of the presentations here.

  • April 11, 2016

    Netflix close to the promised land

    Record growth in 2015 shows Netflix to be well on its way to achieving its goal of 60-90 million US streaming customers, while the latest wave of international expansion suggests Netflix will at least double its global base to over 150 million streaming customers by 2020. Much has been said about the growing SVOD competition from Amazon, Hulu, HBO, Disney and many others, but the simplicity and single-mindedness of the Netflix model is hard to beat, with evidence suggesting it has extended its lead in the toughest of markets, the US. Although growing spend on content origination is putting a strain on the Netflix business, it is critical to long-term success, contributing to the distinctiveness of the Netflix offer and its complementariness with other SVOD services.

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  • April 7, 2016

    UK broadband, telephony and pay TV trends Q4 2015: Diversified gr [...]

    The UK residential communications market maintained strong growth of 6% in Q4, helped by overlapping price increases at BT and TalkTalk, albeit mitigated by weaker volume growth as a result of the TalkTalk cyber-attack.

    This strong growth level benefits from multiple factors, including continually growing broadband adoption, broadband ARPU being boosted by the shift to superfast, price increases across line rental, calls and premium pay TV, and additional pay TV adoption at the lower end.

    We expect a modest dip in market revenue growth moving into 2016 as various one-off boosts drop out, but the underlying drivers of growth are sufficiently diversified to give us confidence that further downside is limited.

  • Virtual Reality in 2016: Launch Year Challenges
    Virtual Reality in 2016: Launch Year Challenges
    March 14, 2016

    Virtual Reality in 2016: Launch Year Challenges

    Virtual Reality (VR) is hitting the high street as the first premium headsets with mass-market appeal become available for developers and consumers. Core gamers are the initial focus of content developers for the new VR platforms served on top-end PCs and Sony’s PS4 console. The VR ecosystems of Facebook and Google are focused on user-generated 360 degree video content, whereas professional creation tools, workflows, and delivery infrastructure will likely take several years of experiments to mature.
  • March 10, 2016

    The sleeping giant wakes into DisneyLife

    Disney surprised few with the launch of the SVOD service DisneyLife in the UK in November 2015, unlike its subsequent push into China. This could be seen as a mitigating strategy in face of partner streaming services beginning to invest increasingly in original content. But it also provides Disney with a streaming presence from which to build, or add spice to future licensing negotiations. Despite finding itself behind in the SVOD audience race, global affection for Disney, a typically handsome platform and a targeted roll-out should see success.

  • March 7, 2016

    Closing in on 50/50 the right way: ITV FY 2015 results

    ITV has delivered double-digit growth in adjusted EBITA for the sixth year running, marked by big increases in both TV NAR (Net Advertising Revenue) and non-TV NAR revenues, which now make up nearly 50% of the total. The outlook for 2016 is promising. We expect continuing real growth in ITV family NAR in line with the market average, and further substantial increases in both Online, Pay & Interactive and ITV Studios. The big question is how ITV can sustain all it has achieved with the international expansion of ITV Studios and use its growing scale to support growth in its Online, Pay & Interactive revenues abroad as well as in the UK.

  • March 1, 2016

    Channel 4 viewing trends and sustainability

    The Government is exploring the privatisation option for future Channel 4 ownership on account of its concerns about the sustainability of the Channel 4 business model in light of recent viewing trends. Channel 4’s focus on 16-34s has put it under extra pressure, but the topline figures do not remotely tell the true story. 2010-2013 was a period of disruption due to special factors. Little decline has occurred since, and Channel 4 group 16-34 and peak time viewing shares have held firm since 2010. As for revenues, the trading dynamics of UK TV advertising have seen audience loss more than matched by increased spend, benefiting both Channel 4 and ITV. This is not about to change, while BBC3 closure and Channel 4 digital video growth will reinforce the financial sustainability of Channel 4, now delivering its remit better than ever.

  • February 16, 2016

    Millennials, mobile and traditional media

    Millennials are the mobile generation, and their preoccupation with mobile erodes time spent with other media, but also offers new opportunities for traditional media brands. Millennials have a different relationship with traditional media; mobile has provided them with control over what they consume and the convenience to access content where and how they like. New content forms such as very short videos have added to the mobile experience, creating social discovery opportunities for media to reach millennials.
  • February 4, 2016

    Sky Q2 2016 results: innovation, service and bonding

    Europe’s biggest pay-TV service provider Sky has delivered another strong quarter, which saw H1 adjusted operating profits across the group rise by 12% year-on-year on a like for like basis at a constant Euro exchange rate, and the upward trend clearly has a lot of mileage left in it. Although Sky UK & Ireland now generates almost all the current operating profits, the performances of Sky Germany & Austria and Sky Italy give cause for optimism and testify to the group’s deep commitment to top of the class innovation and customer service. In a converging online, telco and TV space, the appointment of James Murdoch as non-executive Chairman and entry of Showtime into the Sky Atlantic partnership of Sky and HBO send out a clear message from the TV side about the importance of global scale and ties between its members.

  • February 1, 2016

    China OTT and SVOD

    China holds tremendous appeal to studios and OTT video services, boasting an audience of 460 million online video users in mid-2015 (69% of internet users), which could exceed 900 million by 2020 by our estimate.

    China’s OTT video marketplace generated estimated revenues of $5 billion in 2015, of which two-thirds was due to ad-supported streaming and the rest to paid video streaming.

    Netflix recently pledged to enter China, although the current regulatory environment presents substantial, perhaps insurmountable, challenges to a direct-to-consumer offering

  • January 15, 2016

    Will the young of today ever turn to trad TV?

    The steep year-on-year decline in TV viewing among younger age groups has continued in 2015, with reported TV viewing by children 4-15 and adults 16-24 approaching 30% down on the peak of 2010. The downward trends notwithstanding, there are good grounds for believing that some of the new media consumption behaviours will fall away as today’s millennials move-up the lifestage ladder. In addition, half-yearly comparisons reveal a big slow-down in the rate of decline during H2 2015, suggesting that the explosive impact of smartphones, tablets, apps and social networks has almost reached its limits, while further change will occur at a much slower pace.

  • January 5, 2016

    Channel 4 market impact

    Channel 4 is a key pillar of the UK’s audio-visual economy. Its unique commissioning model fosters a hotbed of new creative UK talent, an ecosystem of independent producers, many micro. Channel 4 commissions a greater share of its budget than any other broadcaster, public or private, also fostering the creative economy outside the M25, and 9% of commissions will be to the Nations by 2020. The future success of the stand-alone independent production companies is not in the hands of ITV and Channel 5, but of Channel 4 and the BBC – the pure PSBs.

  • December 18, 2015

    Channel 4: sustainability and privatisation

    The newly elected Conservative government is exploring all the options for privatising Channel 4, but faces a complex legislative pathway. The privatisation case would be made easier if the current model were unsustainable. Only, Channel 4 is delivering its remit with great success, is commercially sustainable, and promises both to remain highly sustainable and grow its PSB contribution through its current licence ending in 2024. Channel 4 privatisation offers small returns to the Treasury as long as the remit, IP ownership restrictions and ban on vertical integration remain in place.

  • December 11, 2015

    Canal+: things will get worse before they get better

    Booming sales in Africa offset the steady decline of the Canal+/CanalSat subscriber base in France, delivering low but positive group revenue growth. Canal+’s management, now firmly under Vincent Bolloré’s control, is committed to reversing the French decline by investing €2 billion in new set top boxes and content – but production of original series is hampered by corporatist regulation and the market for sports rights is increasingly competitive. Earnings are slipping – under a high fixed cost model any revenue decline depresses profit margin. The trend will worsen under the weight of the increase in domestic football costs next year as well as the planned extra spend on content and set-top boxes.