In Q2, Netflix grew revenue 13% YoY (£12.6 billion), while narrowing its whole-year forecast between $51.0 and $51.4 billion. This was accompanied by an 11% lift in operating income ($4.2 billion). Advertising revenue continues to be on track to double this year to $3 billion.

Recent attention around Netflix’s engagement challenges helps to highlight that the streamer faces the same headwinds faced by all providers of long-form video, amplified by a net viewing loss from the push towards advertising.

As a counter to this, Netflix has a number of initiatives now to diversify its offering and increase engagement: some seem likely to stick and augment while others seem peripheral and value-skewing.

AI was the story of Cannes, both growing the market with new formats and cannibalising it. Not all AI increases to production are monetisable, creating disruption though the fundamentals of building engagement and resonance are unchanged.

Major platforms are still the main winners as supply ownership becomes key for differentiation. Agencies, adtechs, and commerce media are converging in function but diverging in approach as AI blurs the value chain.

Creative is at the centre of tensions between AI-led mass-market automation and human-centred bespoke connection. Platforms are defending SME audiences with end-to-end integration as agentic AI poses both opportunity and threat.

Service revenues improved sequentially but remained negative at -0.7%, with all major markets flat to improving.

Backbook price increases have become quite prolific, but there is a mixed picture on new-customer pricing and considerable ARPU pressure in most markets.

Regulatory push for better coverage in return for longer licences continues to gain momentum, with Portugal the latest to move in this direction.

After a significant period of negotiation, Sky’s offer for ITV’s broadcast and streaming operations has been accepted, with consideration between £1.4 and £1.6 billion (the upside being a performance-related earn-out). Most of the payment will be cash, although it will also include Love Productions, makers of Bake Off, valued at £200 million.

From completion, ITV Studios will operate as a standalone business although a Content Supply Agreement with Sky will maintain a consistent flow of content, of around £420 million per year, which is similar to current levels (excl. sport), but with the potential of further upside.

Sky is making firm commitments on ITV's PSB remit and news provision and plurality. The most pressing issue in regulatory clearance will be defining the relevant ads market: a 'broadcaster-only' definition is an anachronism.

Service revenue growth improved to -0.6%, aided by price-increase mechanics, although this will reverse next quarter.

FinTech MVNO launches have been somewhat tentative thus far, and mobile speed-tiering looks set to become the norm.

O2 has stepped up its price aggressiveness in both SIM-only and with-handset unlimited tariffs and is now the price-leading operator brand in this popular segment.

The government has narrowed the options for DTT switch-off to two dates, but copious details remain undecided, with clarity likely to take some time to emerge.

The DTT spectrum could improve rural and deep in-building coverage considerably, with the focus likely to be on the readily-usable 600MHz band which will be freed up in 2035 under either scenario, and is particularly attractive for BT/EE.

The impact on the broadband market is harder to judge given multiple uncertainties, with there being a potential boost to broadband adoption, albeit price control is a threat. However, playing a more active role in TV distribution is an opportunity.

The transition to IPTV brings benefits to consumers with the availability of significantly more content—mainly global—and greater functionality on the TV set.

However, the emergence of global TV operating system (TVOS) providers has changed the business model of TV manufacturers and introduced an intermediary between broadcasters and consumers.

Prominence regulation can only go so far. Domestic broadcasters need to secure a fair return from Connected TV (CTV) platforms so they can continue to invest in locally-produced content and protect the wider TV ecosystem.
 

Few major football rights deals have been announced since auctions for UEFA rights in its top five markets and LaLiga’s new domestic cycle were completed late last year.

Football is increasing its dominance of sports viewing in the UK driven by expanded live coverage from broadcasters, and continues to be one of the youngest-skewing sports alongside darts and F1.

As premium football rights continue to take the lion’s share of sports rights spending, Sky’s recently extended partnership with Formula One shows the value of complementary rights properties.

Tech companies are reinventing themselves in a once-in-a-generation revolution, with a sweeping reassessment of staff, and product makeovers working their way down to media partners.

Memory and other component costs will impact the 2027 upgrade cycle for consumer tech from PCs to phones—just as local processing of AI features is supposed to sell more devices.

There is a rationalisation of AI’s inevitability across all businesses, despite risks spanning privacy, legality and ‘misfiring’ agents. Media’s red lines on using AI to create content may be overtaken by platforms and creators.

Broadband market revenue for the ‘big 4’ remains in decline as recovering subscriber trends are countered by worsening ARPU.

While abating altnet pressure should eventually lead to recovery, in the short term we expect revenue growth to worsen as the seasonal effect of annual price rises bites in the June quarter.

The longer-term outlook for the altnet sector is increasingly in regulators’ hands as the CMA decides on nexfibre/Netomnia and Ofcom decides on Openreach’s new special offer discounts