Publications

Format: Jun 2016
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Sector(s) Datesort ascending
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

  • EE
  • Hutchison 3G
  • O2
  • Vodafone
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.

  • Facebook
  • Google
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

  • BBC
  • Channel 4
  • ITV
  • Sky
  • UKTV
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

  • Sky
  • Sky Deutschland
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. 

  • Bertelsmann
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.

  • DMGT
  • Gannett/Newsquest
  • Guardian Media Group
  • Johnston Press
  • News UK
  • Telegraph Media Group
  • Trinity Mirror
Media, Press 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

  • BT
  • Sky
  • TalkTalk
  • Virgin Media
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

  • Amazon
  • YouTube
Internet, Media, Technology 2 June 2016
New VOD rules for EU Digital Single Market
  • The Commission proposes to require VOD services to implement a 20% share of EU works in catalogues, which Netflix already largely meets
  • More impactful is the EU’s proposal for OTT SVOD services to provide access to the home service when subscribers travel in the EU, benefitting the UK’s 14 million subscribers
  • TV broadcasters, which observe a 50% EU works threshold in their linear programming served on TV platforms and online players, will be able to opt-in to portability
  • Netflix
  • Sky
  • Sky Deutschland
  • Sky Italia
  • YouTube
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

  • Amazon
  • Apple
  • Google
  • Samsung
  • Spotify
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.

  • Channel 4
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

  • Vodafone
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

  • TalkTalk
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

  • Amazon
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
 
Recent momentum has been largely dual play driven but TV investments, including exclusive on demand content, and a software upgrade and refreshed set top box to be launched in H2 2016, should help with ongoing TV net losses particularly as cost pressures mount from wholesale sports content

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)

  • Virgin Media
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 

  • Facebook
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

  • BT
  • EE
Fixed Line, Telecoms 13 May 2016
Does short form video affect long form content?

Short form video is growing. It is easy to create, share and, with the rise of mobile technology, incorporate within communication

But despite the novel flexibility that mobile technology offers, the actual video most desired is surprisingly traditional

Buzzy, short form content fills gaps that have always existed; yet, despite the hype, it will remain supplementary to long-form programming

  • BBC
  • Google
  • Netflix
  • YouTube
Media, TV 12 May 2016
Internet Trends: Mobile engagement from babies to boomers

While internet and device penetration among younger age groups are approaching saturation, the over 55s have seen an explosion in smartphone adoption, up 83% year-on-year, expanding opportunities for monetisation

More than 50% of ecommerce transactions are now through mobile. Smartphones widen the scope for anytime anywhere mcommerce events and larger-screened phones and tablets facilitate high value transactions

Internet advertising continues to grow quickly, display faster than search and classifieds. Online advertising spend in H2 2015 grew 14% year-on-year to just over £2 billion and the rise of mobile ad spend is dramatic

  • Amazon
  • Facebook
  • Google
Internet, Media, Mobile, Technology, UK Media 3 May 2016
Content marketing online in Europe to 2020

Paid placements for content marketing online in Europe will increase by 186% from 2014-2020, to over €2 billion

It is a particularly exciting area for premium publishers, who can leverage their content expertise to reverse the flight of ad money to lower-cost properties. Almost all are developing creative content offerings to capture this value

Metrics and measurement, disclosure and cost remain as challenges for content marketing online, but growth is strong due to high commitment to spend from advertisers

  • Facebook
  • Guardian Media Group
  • Vice Media
  • Yahoo
Non-UK Media, Internet, Media, Mobile 3 May 2016

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