Publications

Format: Dec 2017
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Sector(s) Datesort descending
Netflix passes 100 million: buy more steak, get less sizzle?

After a quarter coloured by big, returning series Netflix now has just shy of 104 million subscribers worldwide, with, for the first time, the majority living outside the US

Content expenditure continues to dazzle with $4.2 billion spent in the first half of 2017. Negative free cash flow looks set to hit $2.5 billion for the year, with large upfront payments for self-produced and commissioned content coupling with rights acquisition expenditure to create a library of programmes that necessitates continual subscriber growth

Current international growth is small considering the magnitude of the opportunity, revealing the difficulty of creating sizeable customer bases outside of the West, where competitors are cheaper, US programming less desirable and internet access comparatively limited

  • Amazon
  • Netflix
Non-UK Media, Media, TV 25 July 2017
Facebook video: escaping the News Feed

Facebook video consumption - and video ad revenue - is still concentrated on the mobile News Feed, limiting engagement growth and appeal to brand advertisers in the interim period before VR and AR go mainstream 

Features like a dedicated video hub and ad breaks have seen limited deployment, likely as a result of lukewarm user reception, but Instagram Stories holds promise 

To attract long-form viewing Facebook is cautiously investing in original TV content and sports rights, but is late to the game over audiences on connected TVs 

 

  • Facebook
Internet, Media, Technology, TV 28 July 2017
Vodafone Q1 2017/18 results: Broadly flat, but promising signs

Vodafone Europe’s revenue growth bounced back from a weak previous quarter, but its top 4 markets combined were broadly flat in underlying terms. There are nonetheless promising underlying signs, including reduced churn, (slowly) improving subscriber growth and steady NPS

Vodafone has launched all-you-can-eat social/music/video bundles under the ‘Vodafone Pass’ moniker in several markets, which appear both popular and ARPU-enhancing, and being early to market with such an innovation is laudable

Next quarter Vodafone will be hit by the full force of the EU roaming regulation, but excluding this factor the performance is likely to be steady at least, helped in part by the UK business recovering from its recent weaknesses

  • Vodafone
Mobile, Telecoms, Vodafone 31 July 2017
ITVS offsets weak NAR: ITV H1 2017 results

ITV H1 2017 results are in line with guidance contained in its Q1 trading update issued in May, while full year guidance has remained largely unaltered

The 8% decline in TV NAR, timing of programme deliveries and increased business investment were main reasons for the 8% drop in group EBITA despite growth elsewhere limiting the decline in group external revenues to 3%

ITV continues to deliver strong group profit margins of close to 30%; however, online poses several threats to TV NAR. The threats can only be increased by the quest for retransmission fees, whilst the spate of production acquisitions raises questions about risk management

  • ITV
Media, TV, UK Media 2 August 2017
Sky progress against headwinds: FY 2017 results

Sky's full year results for fiscal 2017 are largely in line with company guidance on revenues, costs and synergies given on Investor Day last October, while the company expects further progress in fiscal 2018

Operating profits were badly hit by the massive increase of £629 million in annual payments to the Premier League, however, due to revenue and cost efficencies elsewhere, they fell by just £97 million, testifying to the overall strength of the Sky business

The results presentation revealed a clear sense of strategic direction, supported by much glossy and positive detail, yet revealed relatively little about the headwinds that Sky and other pay-TV operators now face, including the evident decline in Sky UK DTH subscriptions

  • Sky
Media, Telecoms, TV 8 August 2017
BT Q1 2017/18 results: Back to growth (for now at least)

BT Group revenue returned to growth, at least temporarily, helped by overlapping price rises in consumer, one-off regulated price cuts on leased lines annualising out, and mobile handset sales improving

Regulatory news was unusually positive, with Openreach taking the initiative on FTTP, and BT winning an appeal against damaging leased line regulation, which may end up being significantly eased

BT continues to do well in consumer and struggle in business markets, with the ongoing deceleration in the consumer broadband market the main cloud on the horizon

 

  • BT
  • EE
Fixed Line, Media, Mobile, Telecoms, UK Media 9 August 2017
Virgin Media Q2 2017 results: Mixed quarter, but still the fastest

Virgin Media’s subscriber figures in Q2 were a little mixed, with total homes and broadband figures weaker than a year earlier, but pay TV much stronger. ARPU growth fell though, largely due to price increase timing effects, leading to a modest dip in revenue growth

Project Lightning premises passed during the quarter rose to 127k, making at least some progress towards upping its run-rate after changing its roll-out management team and approach, the company declined to give indications of how this will evolve

The broader market context is still one of slowing broadband volume growth, and Virgin Media continues to take market share, being the fastest growing of the ‘big 4’ in both subscriber and RGU volumes

  • Liberty Global
  • Virgin Media
Fixed Line, Media, Mobile, Telecoms, UK Media 15 August 2017
Channel 4: relocation and dislocation

Channel 4 revenues and content spend hit record levels in 2016, but the company faces a declining TV advertising market in 2017 due to a weaker economy and competition

The company’s ability to deliver its unique remit to audiences and producers is also under pressure from Government proposals to move staff outside London

Because Channel 4 can only commission, a move will not stimulate a creative cluster. Risks to the remit include the loss of talent and lower content spend due to higher opex 

  • BBC
  • Channel 4
  • ITV
Media, TV, UK Media 16 August 2017
News, disinformation and Facebook

Facebook content shares suggest that misinformation had broad reach during both US and UK political campaigns, but outright fake news was rare, particularly in the UK 

Mis- and disinformation by both established and new publishers was distributed on Facebook, but monetisation took place predominantly off-site, and content was distributed by a wide range of search and social platforms 

Facebook has acted to limit the reach of disinformation, but can’t and shouldn’t be expected to do so alone as digital news distribution touches on complex questions including information and democracy, media literacy and heterogeneous cultural and social norms

  • Facebook
  • Independent Print Ltd
  • Johnston Press
  • New York Times
  • News Corp
  • Telegraph Media Group
  • Trinity Mirror
Media, Technology 16 August 2017
Voicing concerns: virtual assistants and the media

Voice, and the smart virtual assistants that power voice interfaces, will be a key transformative force over the next five years

Any business providing content or services via digital means is potentially affected, as these virtual assistants promise a single front end for all digital services, representing an extraordinary concentration of control over discovery, delivery and data

Media businesses will clearly be affected. But there is an opportunity for them right now to influence the assistant providers to their advantage, a window that will not stay open forever

  • Amazon
  • BBC
  • Google
  • Samsung
  • Sky
Internet, Media, Technology, TV 23 August 2017
UK broadband, telephony and pay TV trends Q2 2017: Dead cat bounce?

UK residential communications market revenue growth bounced up to 3.6% in Q2, a full 1.4ppt improvement on the previous quarter and reversing the downwards trend of the previous two quarters. However, this was entirely driven by price rises at BT and Sky, with the ongoing market volume growth decline continuing at pace

In competitive terms, TalkTalk was the only operator able to improve its broadband net adds on a year earlier, and Virgin Media was solid with only a modest decline, leaving BT and Sky shouldering the worst of the slowdown, albeit with neither company doing particularly poorly given the market context

New customer pricing remains tight, with Virgin Media in particular becoming more competitive. Looking forward, we expect volumes to continue to slow, and for the pricing boost enjoyed in Q2 to largely drop out next quarter, leading to a renewed revenue growth slowdown

  • BT
  • Liberty Global
  • Sky
  • TalkTalk
  • Virgin Media
Fixed Line, Media, Telecoms, UK Media 23 August 2017
Internet Trends H1 2017: Fruits of the mobile revolution

With smartphones in the pockets of 3/4 of the UK population, and accounting for over half of all online minutes, the mobile revolution is in its final stages, allowing us to survey its impact

As the number of social media users continues growing, untapped older demographics and Instagram help the Facebook suite of apps grow in the UK, but Snapchat is the social media app of choice for UK teens

News publishers face issues with brand attribution as social media platforms overtake search as the main news aggregators online, while small UK video publishers have become unlikely winners in a global market for soft news, infotainment and gags that dominate social video

 

  • Apple
  • BBC
  • Facebook
  • Google
  • Twitter
Internet, Media, Mobile, Technology 5 September 2017
Global recorded music forecasts 2017-21

For the second consecutive year, the global recorded music industry body IFPI reported rising trade revenues, growing 5.9% to reach $15.6 billion in 2016

Our forecasts supplement IFPI’s trade revenue data with richer national-level consumer expenditure data from local bodies in core markets, and project CAGR of 2.3% to 2021, tapering off as streaming approaches maturity

This fairly modest topline growth for global recorded music streaming trade revenues is the product of our judgement that the marketplace remains awash with free music. Streaming trade revenue growth could be higher still if the industry finds a solution to piracy through technological or regulatory means, obviating the need for the ad-funded compromise

  • Amazon
  • Apple
  • Google
  • Sony
  • Spotify
  • Vivendi
  • YouTube
Media, Music and Radio, Technology 11 September 2017
Netflix's edge over broadcasters

The development and utilisation of streaming technologies has allowed major SVODs, such as Netflix and Amazon, to attain a growing proportion of video viewing

However, tech is just one of the advantages held by these services: plateauing content expenditure, the inability to retain IP and inconsistent regulatory regimes hamper the efforts of the UK’s public service broadcasters

The localised nature of audience tastes, as well as the diversity of PSB offerings remain a bulwark to aid in the retention of relevance but content spend cannot lag

  • Amazon
  • BBC
  • Channel 4
  • ITV
  • Netflix
  • Viacom
Media, TV 20 September 2017
Augmented reality: Apple’s next 10-year bet

Through innovations in processing, connectivity and cameras, Apple’s new device lineup dispels fears that the importance of integrated, profitable mobile hardware is in terminal decline

With the broadest range of iPhone price points ever, Apple is confidently balancing between profits and growing the valuable installed base

Apple’s long way to an AR future is now well paved, but a weakness in mapping could prove to be an Achilles heel

  • Apple
  • Google
  • Samsung
  • Walt Disney
Media, Technology, Telecoms 20 September 2017
UK mobile market Q2 2017: Brief holiday

Mobile service revenue growth continued to improve on a reported basis, but most of this improvement came from a significant dip in the MTR cut drag. EE remained the leader in terms of service revenue growth, with both the strongest ARPU growth and robust contract net adds

The quarter also benefited from the current round of in-contract price increases, which were more widespread and at a higher level than last year, and from a brief holiday in the impact of roaming cut regulation, the impact of which will strongly reverse in Q3 as ‘free roaming’ impacts the whole quarter at the same time as mobile users take their actual holidays

Recent spectrum announcements have far from clarified the auction outlook, with Ofcom deciding on a more restrictive spectrum cap than its initial views but both H3G and EE appealing its decision. It will likely be some time before all 5G spectrum auction rules are resolved, let alone actually holding the auctions or building the networks

  • EE
  • Hutchison 3G
  • O2
  • Vodafone
Mobile, Telecoms, Vodafone 3 October 2017
European mobile in Q2 2017: Rare growth spike

European mobile service revenue growth witnessed a rare growth spike this quarter, rising to 0.5%, likely due in large part to the reduced impact this quarter from the European roaming cut regulation, but also helped by a slight softening of MTR cuts and continued ‘more-for-more’ price increases

This roaming regulation holiday will end next quarter and the full impact of ‘free roaming’ will be felt, thus the spike in mobile service revenue growth is likely to more-than-reverse

What is likely to prove lasting is the zero-rated data offers introduced in several markets in Q2, which we expect to see more of given their reported success at improving ARPUs

  • EE
  • France Telecom
  • Hutchison 3G
  • Iliad
  • Orange
  • SFR
  • T-Mobile
  • Telecom Italia
  • Telefonica
  • Vodafone
Non-UK Media, Non-UK Telecoms, Media, Mobile, Non UK Media, Technology, Telecoms, UK Media 3 October 2017
Consumer magazine publishing, Part one: The power of brands and industry collaboration

Evidence is mounting that the consumer magazine market is reaching an existential threshold. In this two-part overview of the UK consumer magazine marketplace we address the need for industry collaboration and brand innovation.

The print market is seeing sector-wide declines and the real structural fallout has only just begun; a supply chain review is urgently required.

Magazine brands lack a unique selling point in online advertising, and although long-disastrous ad tech trends may be finally turning in favour of premium publishers, developing must-have consumer services remains the key.

  • Facebook
  • Google
  • News UK
Internet, Media, UK Media 5 October 2017
Consumer magazine publishing, Part two: The power of brands and industry innovation

In a challenging digital marketplace, publishers face a crisis of purpose. To navigate the turbulent seas, publishers must invest more in their brands and the industry as a whole must innovate

Consumer engagement, previously held by magazines, has sailed to social media where young influencers across Instagram, YouTube and Snapchat challenge established norms of content discovery and curation

Magazines are more heterogeneous than is commonly assumed, and strength lies in a distinctive brand. To right the course, we recommend the industry carry out bespoke reviews that outline brand-specific audiences, use-cases and revenue solutions, and exploit systematic audience data to optimise all brand manifestations - with enhanced marketing income a secondary benefit

  • Facebook
  • Google
Internet, Media, Mobile, UK Media 6 October 2017
US ISPs hail the end of online privacy rules

The Federal Communications Commission’s Privacy Order (FCC) was overturned by the Senate, clearing the way for ISPs to ramp up consumer data-driven advertising revenue

While Google and Facebook dominate digital advertising in the US as in other markets, the US is alone in removing regulatory barriers to ISPs taking a piece of the pie

US ISPs now have a self-regulatory regime for consumer rights on transparency, security and data breaches; but in the UK and EU, privacy advocates prefer enforceable rights

  • Cable & Wireless
  • Facebook
  • Google
Internet, Media, Mobile, Telecoms 9 October 2017

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