Brexit dismal media outlook
The victory of the Leave campaigners in the EU referendum offers no clear benefits to the audiovisual sector, whether we consider domestic and international broadcast distribution across Europe or the creative production sector
The present lack of a clear roadmap and climate of uncertainty promises to be harmful across the entire media sector at least in the short-term, raising the distinct prospect of a recession later this year or next, causing us to downgrade our forecasts from February this year
The Brexit process raises many issues and will be drawn out over several years as the UK finds its feet in the new world. If the UK audiovisual sector is to emerge relatively unscathed, it is vital that it retains its ties with the Single Market by joining the EEA. The alternative is unthinkable
|Media||1 July 2016|
Global music publishing 2016
Music publishing revenues are trending up in a broad sustainable manner across the US, Europe and Japan, underpinned by longstanding music rights regimes
Purchasing is down and streaming taking off, driving a mechanical to performance transition, with direct licensing of Anglo-American repertoire in Europe as in the US
Public performance revenues collected by PROs are also rising as live music grows, general business conditions improve, while TV audiences remain resilient
|Media, Music and Radio||28 June 2016|
Parents and their children online
Cinema, TV and VOD services share in 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.
Parental controls supplied by ISPs are key to filtering content and sites, although a unified approach is better
|Internet, Media, Telecoms, TV||27 June 2016|
UK mobile user survey 2015: Ambition versus perception
Our survey results highlighted disconnects between operator ambition and consumer perceptions across customer loyalty, network performance and quad play, with noteworthy implications for future competitive performance. O2 in particular benefited from strong branding which yielded network confidence and loyalty above that of top network investors, EE and Vodafone
Convergence prospects continue to look supplier driven with consumers reporting little interest in quad play packages even when offered with significant bundle discounts. Recent advertising campaigns have sought to change consumer perceptions of a dichotomy in mobile and fixed broadband provisioning which, if successful, will be to the benefit of all quad play hopefuls
The mobile usage disparities between 16-24 year olds and 55+ users are stark, for instance near 100% of mobile users aged 16-24 own a smartphone while for those 55+, this falls to just over half. The implications are strong for service providers in all manner of industries who are seeing new (younger) users come to market that bear little resemblance to the traditional users around whom much of the operational model is typically built
|Mobile, Telecoms||23 June 2016|
Consumers and digital marketing
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.
|Internet, Media, Technology, Telecoms, TV||22 June 2016|
TV genres and viewing trends over time
TV viewing has one reliable, long term trend: programme genres are watched by consumers at predictable life stages and ages
At a high level, there has been little manipulation of the balance of genres being broadcast. But amongst the sub-genres, editorial optimisation has resulted in an uptick in actual viewing
As the core viewing age of linear television rises, there is an opportunity for broadcasters to leverage this to create the most desirable schedule for their available audience by daypart; with genres that transcend demographics when younger viewers tune in
|Media||16 June 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
|Non-UK Media, Media, TV||14 June 2016|
Europe's Creative Hubs 2016
Europe's Creative Hubs 2016 was commissioned by Bertelsmann and produced by Enders Analysis.
|Non-UK Media, Non-UK Telecoms, Internet, Media, Music and Radio, Non UK Media, Technology, Telecoms, TV, UK Media||8 June 2016|
UK news media: less advertising, new models
The decline in print display advertising in national newspapers accelerated to -16% in 2015, while growth in digital advertising is slowing, and will be unable to offset revenue decline for the foreseeable future.
We believe this decline is structural and irreversible, continuing at a sharper pace than before despite the recovery in the UK economy in 2013-2015, and very different from the cyclical decline of 2009.
Publishers must convince brands and agencies that in the mobile era their superior content environments have added value. If scale newsrooms are to survive, costs must be reduced through collaboration and outsourcing.
|Media||8 June 2016|
UK broadband, telephony and pay TV trends Q1 2016 - Slowing start to the year
UK residential communications market revenue growth dipped down 2ppts to 4% in Q1 2016, due in roughly equal measure to slowing broadband growth, some one-off benefits in the previous quarter dropping out, and generally weak ARPU likely caused by promotional introductory price discounting
Virgin Media was the only major operator to buck the market trend and accelerate broadband growth, helped by its network extension Project Lightning, and this impact will grow throughout 2016, with the remaining operators squeezed between this and the slowing market
Growth in the rest of the year will be impacted by pricing decisions yet to be made, and slowing volumes could well drive market revenue growth below 4% during the year, but we do not expect it to drop very much below this
|Fixed Line, Telecoms||6 June 2016|
Amazon Video Direct: self-publishing for videos
Amazon’s newly launched open video hosting service, Video Direct, will appeal to creators of ‘professional’ videos by offering them a new platform and monetisation options
Amazon’s attractiveness to video creators resides mainly in the prospect of earning a portion of subscription fees from millions of Prime members
While Video Direct might not become a huge business for creators, this move cements Amazon as a media platform and risks hurting YouTube
|Internet, Media, Technology||2 June 2016|
New VOD rules for EU Digital Single Market
|Internet, Ladies List, Media, Technology, UK Media||1 June 2016|
Google Home takes on Amazon Echo
Google Home will compete against Amazon’s Echo in the contest to supply voice-activated home hubs to US homes
Google claims Home is better at voice-based search due to its superior capabilities; pricing is unknown, but is likely to be at par with Echo ($179)
Prime, Fire devices and media services are competitive advantages for Amazon in the US that will make it hard for Google Home to succeed there
|Internet, Media, Music and Radio, Technology, Telecoms||26 May 2016|
Channel 4 setting new records: 2015 annual report
2015 has been a very good year for Channel 4: excellent remit delivery, record revenues and record investment in content origination, supported by the stabilisation of audience share for its main channel, which we expect to continue in 2016.
The spectre of privatisation nevertheless looms. The government may have backed away from full privatisation, but part privatisation is still on the table. In our view, this has even less merit and promises even more conflicts of interest than full privatisation.
Channel 4 should be encouraged by the government’s White Paper on BBC Charter Renewal, which has strongly endorsed its commitment to public service broadcasting under the next 11-year Charter.
|Media, TV||24 May 2016|
Vodafone Q4 2015/16 results: Positive growth in Europe
Vodafone Europe’s service revenue growth reached positive territory in the March quarter, having recovered from a long term decline that it has suffered since 2009, thanks mainly to market stabilisation within the countries where it operates
The company’s service revenues are now growing in Germany, Italy and Spain, with the UK now the laggard, having suffered from recent billing migration issues
With Europe’s major mobile markets now stabilised, Vodafone’s continued high investment levels gives it an opportunity to develop a competitive advantage and outperform its competitors, rather than just keeping up with them
|Telecoms||24 May 2016|
Onwards and upwards: TalkTalk Group Q4 2015/16 results
TalkTalk Q4 2015/16 results firmly indicated that operations had moved on from the cyber-attack; record low churn and strong mobile (+90k) and fibre (+72k) traction with stable gross adds were all in line with the revised strategy announced last quarter and marked the best net adds performance for the year
Wholesale subscriber net adds (+49k) were critical to on-net base stability against retail net losses (-49k), highlighting the short term value of wholesaling as a hedge against heightened (and expensive) retail competition although long term sustainability will rely on traction in retail
FY17 guidance targets EBITDA of £320-360m, with an implied 17-20% margin (+3-6ppts on FY16), which is accessible from MTTS projections, lost costs from revised trading plans, and lower CPAs before counting revenue growth contributions. The operating cost impact from blinkbox, York fibre and other new cost structures appears benign for the moment
|Fixed Line, Telecoms||24 May 2016|
Novel disruption for consumer books
Consumer book sales look unusually resilient in the context of the extreme changes in other print media sectors, newspapers and magazines, over the past decade
Ebook and ecommerce sales have offset the high street sales decline, although the declining number of retail outlets casts a long shadow over the future of discovery
New options for authors, particularly self-publishing ebooks, threaten the existing funnel of authors to publishers, but could also be a new source of talent
|Media||18 May 2016|
Expanding and upgrading: Virgin Media Q1 2016 results
Virgin Media broadband net adds of 70k were the highest in 6 years, with record market net adds share of 35% in a slowing broadband market, and the strongest consumer cable revenue growth in over a year. Project Lightning roll-out and strong marketing were the key drivers and are expected to continue over the year
Project Lightning updates informed that of the 4m total premises budgeted for network expansion to 2020, at least 25% of these will be connected via FTTP, signalling increased infrastructure competition with Openreach whose G.fast roll-out plans potentially diminish the current cable network speed advantage (though further cable upgrades are both possible and would recover this)
|Fixed Line, Telecoms||17 May 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
|Non-UK Media, Media, Mobile, Non UK Media, Technology, TV||16 May 2016|
BT Q4 2015-16 results: Sound investment-driven growth strategy
BT Group’s revenue growth slipped back to 1.3% in Q4, but this reflected the reversal of various one-off boosts in the previous quarter, with underlying trends still solid across the group, with Consumer and Openreach still the standout performers
We do not think that BT’s approach of keeping the BT and EE consumer brands separate will maximize the cross-selling opportunity, but we consider this opportunity to be modest at best in any case, and therefore not worth the risk of a disruptive integration
On both fixed and mobile, BT is using cost savings to invest in faster speeds, better coverage and improved service to drive competitive advantage and price premia, a very sound strategy in our view
|Fixed Line, Telecoms||13 May 2016|