Publications
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21CF and the bid for Sky: state of play Secretary of State Karen Bradley has intervened on two UK public interest grounds in 21CF’s bid for 100% ownership of Sky: media plurality, as in 2010, and a commitment to broadcasting standards, new in 2017 Ofcom will assess any implications of 21CF’s full control of Sky on whether it is ‘fit and proper’ to hold a broadcast licence, reporting back on 16 May Undertakings are a live issue in the 2016 bid, notably to protect the editorial independence of Sky News, noting the bid faces determined opposition from certain quarters
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Media, TV | 21 March 2017 |
360 and Virtual Reality: a new angle for video entertainment The temporary cool-off in hype around VR following a very buzzy 2016 is not reducing the flow of investment and talent into the industry, notably in video production utilising 360Video technology; setting the stage for the development of a truly new entertainment medium Fully immersive interactive worlds will continue to be the mainstay of the video games industry, while video entertainment will exist in a multi-track environment, with some genres (news, documentaries , natural history) making 360Video mainstream well before long-form narrative-driven entertainment 2017 will still be a challenging year for consumer device VR roll-out and mass market adoption; Oculus, Google, and Sony continue to seed the market, providing large scale funding and equipment directly to developers and content producers
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Media, Technology, Telecoms, TV | 16 March 2017 |
UK broadband, telephony and pay TV trends Q4 2016: Under pressure UK residential communications market revenue growth fell to 3.3% in Q4, from 5.4% in the previous quarter. The slowdown was mainly caused by BT’s overlapping price rise dropping out, but there was also ARPU weakness at Sky (due to price rise timings) and TalkTalk (due to re-contracting customers) Volume growth in the core three products continued its decline, with broadband reaching saturation, line rental suffering from Virgin’s broadband solo offering and pay-lite TV offers losing momentum. Looking forward, recent and upcoming price increases should allow some recovery from current revenue growth levels However, competitive pressures are increasing. Virgin Media’s network extension continues to accelerate, TalkTalk is attempting to stabilise its base and new customer pricing has fallen substantially since December 2016 – causing a dramatic disparity in new/existing customer pricing. The higher churn and/or reduced ARPU this is likely to cause, combined with slowing market volumes, indicate that market revenue growth is unlikely to recover to the 5-6% it enjoyed for most of 2015 and 2016
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Fixed Line, Media, Telecoms | 16 March 2017 |
BT tightens grip on Champions League TV The latest auction of UEFA Champions League televised UK rights has seen further high 32% inflation as BT renewed its ownership for the three seasons from 2018/19 for an annual payment of £394 million Although BT annual payments are to increase by £95 million from 2018/19, the new contract offers added commercial attractions, though we expect BT’s efforts to monetise them will fall some way short of the cost increase However, BT had to win to cement its position against Sky as a strong number two in UK premium pay TV and we expect weaker future inflation of premium football rights. For Sky followers, the focus is now on the UEFA auctions in Germany and Italy, where the outcome is far from certain
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Media, TV | 15 March 2017 |
How is TV catering for its oldest and most loyal audience? Linear television's audience is ageing; with the drop in viewing by younger demographics, consistent viewership by the over 65s has seen them increase their share of total viewing since 2010 from 24% to 31% The difficulties and efforts to re-engage with the younger cohorts are well documented. But what of the resilient, older group that forms the stable core of the television audience? Conspicuous attempts are being made to create specific shows targeted at the oldest viewers, but outside of limited categories, creating relevant programming may be more difficult than expected
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Media, TV | 14 March 2017 |
“ITV for everyone”: ITV FY 2016 results 2016 proved a mixed year for ITV as sizeable falls in TV spot advertising and Studios US revenues were offset by continuing strong growth in Online, Pay & Interactive and ITV Studios, while ITV ended the year with a very healthy balance sheet As the economy and advertising enter testing times, diversification may not only have helped reduce ITV’s reliance on this highly volatile income stream, but also the growth of ITV Studios may just be starting to pay off in terms of reversing the decline in ITV Main audience share Looking ahead, the strategic focus of ITV has shifted, now placing greater emphasis on expanding ITV content distribution at home and abroad across multiple platforms, all age groups, and growing new revenue streams, especially pay, to extract added value from its growing content assets
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Media, TV | 9 March 2017 |
The connected evolution of UK TV platforms The past 14 months have seen a flurry of activity from the major UK television platforms, with all but one releasing a revamped version of their television offering; a neccessary reaction to the rise of VOD consumption and the threat this poses to traditional models The result is 'connected' offerings, with the major players aiming to exploit the impact of this technology by seamlessly integrating on-demand capabilities, and in doing so mitigate the further shockwaves resulting from its emergence No offering is likely to single-handedly alter the current subscriber landscape radically; with the pay platforms' each taking a unique—and to a degree—entrenched path that affirms its core consumer base, the greatest shifting of sands will likely come from changes in consumer trends or content quality
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Media, Telecoms, TV | 8 March 2017 |
Mobile World Congress: a look at tech & media Smartphone hardware did not take centre stage at the year’s premier mobile industry event in Barcelona, with license-built Nokias generating as much excitement as flagship smartphones from HTC, Sony and Samsung In VR, AR and IoT, the most impressive signs of progress were under the hood rather than in flashy device announcements – as the actual use cases become more specific, so does hardware and software Concrete business applications around the personal data generated by connected mobile devices was a major theme, with new types of automation and personalisation in services and media – and a growing market for security
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Media, Mobile, Technology, TV | 7 March 2017 |
Prophets before profits: Snap goes public Snap is going public: its filing shows widening losses and slowing user growth, calling into question its ability to reach profitability and justify the ~$20 billion valuation it is seeking Long term, the company hopes to capture the large brand advertising budgets it expects will leave TV as linear viewing declines. But how it plans to do so is unclear, as it has shown little interest in connected TVs, and the ad model for augmented reality – Snap’s focus – is a long way off Most of all, investors are being asked to trust in the ability of Snap’s founders – who will retain full control of the company – to continually innovate products which will attract users and advertisers
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Non-UK Media, Internet, Media, Mobile, Non UK Media, Technology | 1 March 2017 |
Fashion's new look: digital sets new trends Fashion underpins the growth of ecommerce; online took a 14% share of all fashion retail in the UK last year and is set to rise further, challenging the economics of physical retail Mobile is a key driver, it is changing research and shopping habits, and in turn affecting supplier product cycles, merchandising and marketing strategies Social media has disrupted the traditional shopping funnel, changing how trends and styles proliferate and shifting the sites of authority and influence in a £66 billion sector
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Internet, Media, Mobile, Technology | 28 February 2017 |
Amazon’s ad business: shoppers for sale Amazon’s marketing services bring in a growing stream of direct, high-margin revenue, but their main role is still in supporting vendor partnerships Amazon uses customer profile data to profit from its own media and that of others, illustrating the value of a direct customer relationship in online advertising In the future, Amazon’s moves into video content and voice interfaces are likely to significantly expand ad inventory, but maintaining the trust of shoppers is not straightforward
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Media, Mobile, Technology, TV | 27 February 2017 |
Virgin Media Q4 2016 results: Accelerated build, delayed benefits Virgin Media successfully ramped up its network extension in Q4, passing more than double the homes in the previous quarter, and above the rate required to meet 2017 expectations Net customer additions were, however, relatively weak, entirely due to extra churn caused by the price increase implemented in the quarter. The price increase’s effect on ARPU and revenue growth was muted by ARPU discounting for new customers, leaving revenue growth broadly unchanged Subscriber growth has already improved in early 2017, and is likely to continue to improve through the year. The discounted ARPU impact will be more sustained, but robust revenue growth is still likely throughout the year
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Fixed Line, Media, Telecoms, UK Media | 24 February 2017 |
21st Century Fox: Unfinished business with Sky 21st Century Fox’s (21CF) second attempt to acquire Sky comes at a time when the TV world faces mounting online pressure, accompanied by erosion of territorial boundaries in an increasingly global marketplace Despite some investor concerns about Sky’s ability to deliver its operating targets over the next five years, we consider the underlying business to be sound and starting to show benefits that derive from its international scale 21CF’s bid has a strong strategic logic in terms of growing international scale further and evolving a global platform that integrates shared content strengths in sports and entertainment with Sky’s top of class expertise in customer relationships
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Media, TV | 22 February 2017 |
News brands: Rise of membership as advertising stalls Despite a slowing of circulation decline in 2016, UK national newspaper brands continue to face profound structural challenges, with print advertising spend expected to be down at least -15% for the year In digital advertising, tech and distribution platforms continue to dominate growth with newspaper publishers and other content producers competing for an increasingly small slice of the revenue pie In this context, many publishers are turning to paid membership and content subscription models to generate online revenues; success here will require a radical shift in thinking to a retailer mindset that delivers high quality reader experiences through integrated execution of tech, data, marketing and design
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Media | 15 February 2017 |
Vodafone Q3 2016-17 results: Modest slowdown Vodafone Europe’s mobile service revenue growth worsened to -0.6% from -0.2% in the previous quarter, the first deterioration following at least nine quarters of consecutive improvement, with the UK particularly weak The company could nonetheless grow profits handsomely if revenue growth stabilises at this level, with more clarity on the medium term prospects for this likely to come with next quarter’s results and guidance for 2017/18 Our main concern continues to be the company’s declining subscriber share, particularly in consolidating markets where its historic advantages of having high market share may be rapidly eroded
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Mobile, Telecoms, Vodafone | 9 February 2017 |
Risks to UK consumer spend in 2017 The Bank of England predicts a mild decline of real household consumption growth to 2% in 2017, as higher inflation chews at disposable income City forecasters are more circumspect on consumption growth, and we agree that households are likely to display more caution on expenditure relating to non-essentials Retail sales, a bellwether for advertisers, look subdued in the New Year, and we maintain our forecast of flat advertising expenditure growth in 2017 |
Brexit, Media, Technology, Telecoms | 8 February 2017 |
TalkTalk Group Q3 2016-17 results: Weak quarter, reassuring guidance TalkTalk had a weak quarter, as was pre-warned, with the decline in the broadband base accelerating and consumer revenue growth of -6% slightly worse than the previous quarter Guidance was however very bullish, with the company confident that it can bounce back to return to positive net adds in the March quarter, while still hitting its profitability guidance This looks a difficult task in a market which is still highly competitive, but if it can achieve it, the longer term aim of a stable customer base and growing revenue and profits looks much more plausible
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Fixed Line, Media, Mobile, Telecoms, UK Media | 7 February 2017 |
Enterprise cloud on the horizon Enterprise cloud computing democratises access to IT capacity ranging from specialised software to platforms to infrastructure, transforming cost structures in sectors like media and retail Cloud enables unprecedented scalability of bandwidth for digital media services like Pokémon Go and Netflix, while also hosting the back-end for advertisers and retailers As the industry consolidates quickly, intense competition among Amazon, Microsoft and Google is delivering value to customers and boosting adoption
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Internet, Media, Technology | 6 February 2017 |
Sky on track - H1 2017 results Sky H1 2017 results are broadly in line with company guidance on revenues, costs and synergies given at the 2016 Investor Day The core focus since the formation of European Sky in November 2014 has been investment for growth in all sectors of the business (i.e. retail products, content offers and customer service), an approach that is beginning to bear fruit. Sky Italy had a notably “excellent” start to the year Most eye-catching in the results release was the planned launch in fiscal 2018 of an IP alternative to Sky’s DTH service. That speaks volumes about the know-how Sky has accumulated over the last ten years in meeting customer demands and building customer relationships
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Media, Telecoms, TV | 3 February 2017 |
The Media Day 2016 - multi-tasking millennials and multi-media baby boomers Ofcom’s 2016 Digital Day confirms a pronounced shift in media and communication habits of UK adults since 2014 towards mobile and online viewing of TV content. Time spent on TV devices has proved robust in the digital transition thanks to internet platforms like Netflix and Amazon, along with older users’ attachment to linear TV. The ascension of mobile at the expense of computer time is very marked due to changes in the home, and among the young, is driving multi-sourcing and multi-tasking. |
Internet, Media, Music and Radio, TV | 3 February 2017 |