Publications

Format: Sep 2017
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Sector(s) Datesort ascending
Virgin Media Q3 2010 results: resilience under pressure

VMed’s Q3 results showed continuing strength in the face of heavy marketing by BT Retail and BSkyB, although cable churn increased significantly

There are plenty of further challenges on the horizon, including a downturn in consumer confidence and later, the launch of YouView and wider deployment by BT of next generation access

The broad based nature of the company’s growth and its plans for further product development in TV and broadband continue to give us confidence in the potential for further growth in cash flow, albeit at a more modest pace

  • BT
  • Sky
  • TalkTalk
  • Virgin Media
Media, TV, Internet, Technology, Telecoms, Mobile, Fixed Line 27 October 2010
Versatile multiproduct strategy: Sky fiscal Q1 2011 results

A switch in marketing focus from HD to home communications and sports appeared chiefly responsible for a record quarter in multiproduct take-up, with the biggest increases being registered in broadband, telephony and line rental

Although Q1 2011 net HD take-up halved against the previous quarter, partly reflecting reduced emphasis in marketing plus the World Cup factor, there is abundant room for growth and we expect a strong Q2 as Sky enlarges its HD offer with the ITV digital channels, and prepares for the launch of Sky Atlantic HD in early calendar 2011

The exceptional leap in home communications product sales underlines Sky’s competitive strengths against the rest of the sector using its existing LLU platform, suggesting Sky is under little pressure to sign up to BT’s more expensive high speed broadband access product

  • Sky
Fixed Line, Telecoms, TV, Media 25 October 2010
Windows Phone 7: fast but late

Microsoft’s new Windows Phone 7 operating system is launching with a big bang: ten handsets, eighteen operators, and a massive marketing campaign

The OS itself is positioned firmly in between iPhone and Android in terms of ease-of-use and customisability; it is as fast as the best-in-class but no faster; and its interface is bold but will not be to everybody’s taste

A lack of apps, limited distribution, and expensive handsets will likely limit sales in the short term. Longer term, being late in the game with no truly compelling unique feature will make building a major position very challenging, but not impossible

  • Google
  • Microsoft
  • Apple
Telecoms, Technology, Internet, Media, Mobile 21 October 2010
Ofcom gives YouView clearance

Ofcom’s decision not to investigate Project Canvas under the Competition Act removes one more regulatory obstacle to the launch of the broadband connected TV service with the brand name YouView

It looks increasingly as if the YouView launch will experience further delay, with autumn 2011 looking steadily more likely as disputes continue over the satisfactoriness of the technical specifications released by YouView for meeting manufacturer needs

Although backed by powerful broadcast and ISP interests, YouView faces stiff challenges to achieving widespread adoption among ‘Freeverse’ homes, with much depending on YouView’s ability both to deliver consistent product quality and to get its message across

  • Virgin Media
  • TalkTalk
  • Sky
  • ITV
  • Channel 4
  • BT
  • BBC
Fixed Line, Telecoms, Technology, Internet, TV, Media 20 October 2010
UK Residential Broadband Market 2010

The decline in UK residential broadband market growth has paused due to accelerating adoption by older householders and increased household formation. We expect 970,000 net additions in 2010 and 20.5 million broadband households by 2015. However we expect growth will continue to decline from 2011 as the impact of the government spending review feeds into consumer confidence and the market becomes increasingly saturated

As BT’s next generation access network is deployed, there is likely to be accelerated improvement in DSL price/performance, with DSL customers migrating to a 40 Mbit/s headline speed as it becomes available. The impact of this is likely to be compounded by Virgin Media up-rating its broadband portfolio from speeds of 10, 20 and 50 Mbit/s to 20, 50 and 100 Mbit/s

In the absence of further consolidation, in market share terms the industry appears set to remain divided into three strategic segments: the ‘big three’, brand extenders, and Sky. We expect residential broadband market revenue (excluding content) to continue to decline gradually, stabilising by 2015 as the impact of market share gain by lower priced ISPs attenuates due to a combination of a maturing market and reduced price differentials caused by NGA

  • Vodafone
  • Virgin Media
  • TalkTalk
  • T-Mobile
  • Sky
  • Orange
  • O2
  • BT
  • EE
Fixed Line, Mobile, Telecoms, Technology, Internet, TV, Media 20 October 2010
Google UK Q3 results: modest slowdown

 In Q3, Google’s UK revenue increased 14% YoY to £520 million – in line with our expectations of slowing growth in H2 – our forecast for 2010 remains at £2,075 million (all figures excluding estimated hedging gains)

In its earnings call, the company shared global display and mobile revenue numbers – on an annualised basis these now represent $2.5 billion and $1 billion respectively (with some overlap) – much higher than previous estimates

We have adjusted our 2010 forecast for UK internet advertising to account for higher than expected classified growth and previously unreported spend to £3,900 million

  • Google
Internet, Media 14 October 2010
Google TV: US launch imminent

Google has confirmed the first content partners for the US version of Google TV – including Turner, HBO and Netflix – which is expected to launch within the next 2 weeks

No new distribution partners have been announced and rumoured pricing for enabled Sony TV sets suggests that Google TV will initially be a premium product

At present, Google TV’s main selling point appears to be providing a decent web surfing experience to the TV set – in our view, better content is needed if it is to compete with Apple TV and other internet TV devices

  • Google
Media, TV, Internet 6 October 2010
Everything Everywhere: UK market leader (for a bit)

 

Everything Everywhere’s maiden investor day presentation was soured by the disappointing results it reported for Q2 2010, with service revenue growth underperforming its UK competitors by 7 percentage points. At current relative growth rates, O2 will retake its lead by June 2011

The synergy savings targets have been maintained, but focused more towards back office functions and away from front line assets such as shops and network base station sites, with the brands being kept separate for the time being. This is a sensible enough approach, and the cost savings still look eminently achievable

Going forward, the company will have the advantage of a better network but the disadvantage of disruptive integration for the next few years. Its main challenge will be to reverse the current negative revenue momentum, which puts both its revenue and margin targets at risk

 

  • T-Mobile
  • Orange
  • EE
Telecoms, Mobile 3 October 2010
Media advertising in 2010 and 2011

Total UK media advertising will grow 3.7% to £15 billion in 2010, on a bounce back of TV, internet and national newspapers from the recession

If UK economic growth slows to a crawl, UK media advertising could decline by about 1.1% in 2011

For local and regional newspapers and magazines, ongoing structural pressures are dominating the recovery in 2010, and we expect the headwinds will be even stronger in 2011

Media 3 October 2010
Music market trends in H1 2010

 

US recorded music sales continued to slide in H1 2010 (-9% year-on-year for physical and digital formats (excluding ringtones), on a track equivalent basis). The UK recorded music market has been stronger than the US in recent years, and H1 2010 was no exception (down -1.5%)

Music major revenue declines on recorded music are being partly offset by growing licensing fees paid by music streaming services, as well as artist and merchandising services under 360 degree contracts

High margin music publishing revenues remain the pillar of music major profitability. These declined in H1 2010 due to the delayed impact on current quarterly results of the advertising recession in 2008/09, and we expect the advertising bounceback to be reflected in future results

 

  • Apple
Music and Radio, Media 29 September 2010
UK internet advertising: 5 year forecasts

We forecast UK online advertising to grow by 8% CAGR to £5.1 billion by 2014, representing approx. 33% of total advertising spend, overtaking press

Search is the main growth engine, which we predict will reach £3.1 billion in 2014, due to its appeal and value to advertisers as a sales and lead generation tool

Growth in spend on social media and video networks will push online display to just over £1 billion by 2014; whilst classifieds will grow to £840 million

  • Google
  • Facebook
  • Yell
Media, Internet 29 September 2010
French telecoms retail highlights

Late entrant Bouygues Telecom is gaining broadband market share via the quad play. Orange and SFR have now also launched quad plays, but Iliad’s mobile offers will be ready only in 2012

Iliad hopes to use its new Freebox to energise recruitment around new IPTV services in Q4 2010. SFR will also launch a new box

Led by a likely VAT hike for triple play bundled IPTV services in 2011, triple play pricing is set to rise after many years, from €30 to €35/month. FTTH upgrades in urban areas will be gaining visibility this winter

  • Iliad
  • Orange
  • SFR
Telecoms, Fixed Line, Non-UK Telecoms 13 September 2010
Google has launched Google Instant

Google’s new Google Instant displays and updates results in real time as users type in queries, shaving an estimated 2-5 seconds off the average 9 seconds taken to carry out a search

Available in the US and UK now and key European markets shortly with other territories and mobile to follow in 2011, Instant will help Google to differentiate its search engine in an increasingly competitive market

Google Instant should stabilise, if not boost, the company’s share of queries, which has fallen both in the US and globally since February, and may also enhance the value of ads on Google

  • Google
Media, Internet 9 September 2010
Mobile data economics: the limit of unlimited

The unlimited mobile data plan, rightfully credited with being a key part of the current boom in handset-based mobile internet use, is now being scaled back across the US and UK, with capped data bundles of various sizes now preferred

The economics of data are such that current price plans (including unlimited ones) combined with current average smartphone data usage rates are still respectably profitable for the mobile operators on an incremental basis, provided they do not substitute for the far more profitable voice and text messaging services

However, current average smartphone usage rates are around 1/50th of home broadband usage rates, and smartphones’ improving screens, increased storage capabilities and faster processors are enabling some users to push well beyond profitable usage levels, leading to the danger that average usage may surge in the future (possibly even within current 2 year contract periods), to the point where current plans are not profitable

Usage caps are therefore probably a long term necessary evil to guard against this risk, but mobile operators need to be sympathetic to most consumers having no idea how much data various activities might use, and protect them against the bill shock that might result from out-of-bundle charges

Telecoms, Mobile 6 September 2010
Apple: ecosystem upgrade

Apple has upgraded its iPod family and also iTunes, which now includes new social networking features, and revamped Apple TV, now reinvented as a streaming-only device at a fraction of its former price

We expect iPod sales volumes to continue to slide despite the update, but estimate that improved ARPU will add $600 million to Apple’s topline in FY2011. However, iPhones and Macs are the company’s key revenue drivers

The revisions to Apple TV should drive up sales, but the content offering remains weak (especially outside the US) and it is joining an already crowded playing field – its main benefit is likely to be supporting the Apple ecosystem

 

  • Apple
Media 5 September 2010
Pay walls and the size of newspapers

A newspaper pay wall subscriber is worth only a quarter to a third of a print buyer: even if every single print buyer is successfully converted to the pay wall, newspapers will still face a basic problem of scale

Pay walls will not be able to compensate for lower revenue per reader by expanding the audience for paid news, due to the long term decline of circulation, free online news, 24-hour broadcast news and free-sheets

Future change will be radical: publishers may need to consider producing a newspaper its loyal readers recognise and value with just 200 rather than 500 journalists

Media, Internet 31 August 2010
2010 TV NAR bounce back to continue into Q4

The bounce back in TV NAR (Net Advertising Revenue) now looks set to continue into Q4, resulting in full year- on-year growth of about 12.5%

The bounce back has more than reversed the -11% fall in 2009, although it still leaves TV NAR in 2010 about -5% below pre-recessionary levels in 2007 (nominal prices). Meanwhile, persistent worries about the economy and the impact of government debt reduction measures suggest flat growth in 2011

Much depends in 2012 on the outcome of Ofcom’s review of the airtime minutage quota and distribution rules, where its own commissioned econometric analysis suggests that harmonisation efforts leading to increases in airtime supply could cause large reductions in TV NAR

Media, TV 26 August 2010
UK Classified Advertising Annual Report: Part Two- Property, Auto, Directories

Part Two of our annual report on classifieds covers property, auto (used) and directories

As with recruitment, covered in Part One, a step change downwards has occurred in the underlying volumes of transactions driving classifieds in property, autos and directories

Publishers of commercially-run classified sites must contend to different degrees with the presence of Google

Advertiser interest in print editions of directories will remain as these continue to attract mainly older consumers and households outside urban areas

Advertisers face a fragmented marketplace online for directory services, as desktops are used for in-home services, while smartphone apps supply the destination services prized by the affluent, young urban dweller

  • Google
Media, Internet 25 August 2010
UK Classified Advertising Annual Report: Part One- Overview and Recruitment

Classifieds generated £5 billion in 2009, down 13.3% on 2008, accounting for one-third of UK advertising spend

The migration of classifieds from print media to online media accelerated during the recession, with no prospect of a ‘bounce back’ -recruitment has fallen 65% from its peak of £1.5 billion in 2004 to (our estimates) about £649 million in 2009 and down to £538 million in 2010

Key players do not charge on a performance basis, so online and print media retain similar charging models

Digital revenues on a like-for-like basis are discounted by 60-70% of print, with online players offering services, such as display for branding purposes or web marketing to SMEs, to add to core advertising income

Media, Internet 24 August 2010
Internet advertising & e-commerce: UK, Germany, France

Germany, the UK and France are the three largest advertising markets in Europe, worth €40.3 billion in 2009, of which €8.9 billion was spent on internet ads, 65% of the total across the continent (based on IAB Europe survey of 19 countries)

In per capita terms, the UK and Germany spend the most on advertising: in 2009, roughly €200 per head was spent in the UK and Germany, 40% more than in France

  • Google
Media, Internet, Non-UK Media 22 August 2010

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