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Market revenue growth dipped to around zero in Q1, with fierce competition on new customer pricing the major factor
All four of the big operators now suffer from declining ARPU, with existing customer price rises increasingly hard to land given falling prices for new customers
The rapid move to superfast is not helping as much as it should; the operators will hope that they fare better with the move to ultrafast
After a period of significant outperformance, O2’s Q1 results reverted to sector average revenue growth with ARPU down by 3% and all of the growth coming from ‘other’ revenues
Regulation limiting out-of-bundle spending has been a significant drag which will continue to worsen
A more competitive market and a punishing regulatory outlook will make it very challenging to sustain 2018 growth trends as this year progresses
Video sharing platforms, like YouTube, Facebook Watch and Twitch, are vying to attract creators with monetisation options such as branded content and user payments.
Advertising income, already limited for many small and medium-sized creators, has been undermined by YouTube’s response to brand safety concerns.
The new tools come with their own obstacles, but are necessary to keep platforms attractive to video creators.
Online advertising plays a larger role in the UK economy than anywhere else in the world, having grown hand-in-hand with the highest ecommerce spend per capita and a business creation boom.
There are many factors behind this success, access to investment and top talent (both technical and creative) structural characteristics in the economy and society—not least a culture of experimentation and entrepreneurship.
As with all maturing industries, sustaining future growth will bring new challenges: along with economic headwinds, UK online advertising now faces an urgent need to restore public trust, with a combination of statute and self-regulation.
The UK government is now consulting on a wider TV advertising ban until 9pm for food and drink high in fat, salt and sugar (HFSS), to combat childhood obesity
TV and TV advertising are not the cause of children being overweight or obese (O+O). Policy change in this area should inform and educate parents and young children, as they have in Leeds and Amsterdam
With 64% of the UK population being O+O, obesity is a complex societal issue requiring a multifaceted approach. The evidence from existing rules, and plummeting TV viewing amongst children, says that further restrictions on TV advertising will be ineffective in curbing the rise of obesity in the UK
TalkTalk hit the bottom end of its (revised) 2018/19 EBITDA guidance, an achievement given fierce price competition and the margin-dilutive effect of high speed upgrades
This is however helped by one-off Openreach price cuts, and price rises for ancillary products (voice calls and pay-TV) and out-of-contract customers that look hard to sustain
Subscriber growth slowed dramatically in Q4, and continuing this more measured approach could help the company counter multiple market pressures, and perhaps even lead to a détente in the current price wars
Francois Godard was quoted in the Financial Times on Italy’s Mediaset buys near 10% stake in Germany’s ProSiebenSat. 1 He said "Mediaset’s move was consistent with its message to shareholders that it is in a scale game to sell advertising across borders and have resources to invest in bigger programmes. Italians and Germans don’t like and watch the same programmes. Mediaset is not a producer of quality content with international audiences." He added that media groups in the UK, Europe’s largest advertising market, were unlikely to be targeted by Mediaset, as the British market was “pretty consolidated”. “It would be difficult to see ITV get into a pan-European thing like that,”
Claire Enders was quoted in the Financial Times on ITV facing off with BBC over joint streaming service BritBox. Claire Enders believes proposed advertising restrictions on unhealthy foods and pressure on the BBC to waive licence fees for the elderly mean the BBC, along with Channel 4 and Channel 5, are unlikely to pay.
Vodafone’s operating performance worsened again this quarter with revenues down 3.3% and an extension of its underperformance relative to peers
Vodafone was right to cut its dividend given the extremity of the cash constraint. With financials in Euro terms in negative territory and worsening, an elevated and progressive dividend was not sustainable
In spite of difficult market conditions, the lower end of guidance looks achievable as comparables will become easier and football rights costs decline. The transformation programme will need to pay off fast to deliver any meaningful growth