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“The world has moved on from the console model that Sony is offering,” said Gareth Sutcliffe of Enders Analysis, adding that the PlayStation maker had “rigidly stuck” to a model of high costs of hardware and content.
Gareth Sutcliffe, senior games analyst at Enders explained to City A.M. that Netflix’s foray into game streaming is “a natural progression for them”.
“They need to address the TV audience and they intend to do that without requiring an expensive console which is an enormous barrier to entry for many.”
Sutcliffe said Microsoft and Netflix “share a similar vision”, of low cost access to a wide library of games via subscription without the need for expensive hardware.
However, rival Sony “couldn’t be further away from that”, he said, adding that their need to discount PS5 in the UK shows that “lowering cost is vitally important”.
Tom Harrington, head of TV at Enders Analysis, said success on the pitch was matched by success on screen, saying: “If you’re doing well you’re more likely to get people watching. Also accessibility matters. It’s on BBC1 and this World Cup bar one or two games they’ve all been on free to view channels whereas previous tournaments all the games were available but it was on the red button and just harder to access.”
Mobile service revenue growth finally got close to the rate of inflation this quarter, doubling to 7.5% as the operators benefitted from mid-teen price rises.
Growth will wane from here with expected revenue growth of 6% this calendar year and 3% next, with ongoing cost-inflation pressures.
H3G looks set to fare better than others on the top-line in 2024 but its profitability is looking somewhat irredeemable, with negative cashflow even with more normalised capex.
Market revenue growth surged to 2% in Q2, but entirely-and-more driven by price rises, with underlying trends negative across volumes and ARPU.
Broadband volumes in particular turned sharply negative, largely due to a post-lockdown hangover combining with weak economic conditions.
The outlook is bleak: price rise benefits are set to wane and then reverse, and weak volumes will feed through, with economic recovery needed for a return to sustainable growth.
“[Disney] is asking more and more of the customer . . . while the amount of new content on offer will likely decline,” said analysts at media consultancy Enders, who warned of “a negative spiral and real consequences” if the strike drags on.
“Lack of fresh content, particularly for Disney+, will increase churn,” they added.
After a period of stagnation, many of the core business lines at the US tech mega-caps are back to posting respectable growth figures. The rest of the year will bed in strong revenue growth.
However, the sector is still facing a transition to new priorities. Core business strength should allow firms to shift from cost-cutting to the investment needed to fight the more competitive era they are facing.
AI is the number one focus, but the market for AI tools themselves is still nascent. Applying AI to internal problems has more promise. For instance, it is helping Meta solve its measurement and engagement problems.
Thanks to Parks (+11% YoY, $2.43 billion), Disney's Q3 operating income remained flat, balancing the decline from Media and Entertainment (-18% YoY, $1.13 billion) as DTC only lost $512 million and linear dropped by 23% ($1.89 billion). No new major growth initiatives were announced but Disney will look to stem DTC losses through Disney+ price rises and a password sharing crackdown.
Major segment resets are looming as Disney looks for new partners for ESPN and possibly buyers for its legacy TV business, ABC.
A difficult remainder of the year will be prolonged if the Hollywood talent unions strike into the autumn and beyond, while Bob Iger stays on as CEO through 2026.
In a reform of the competition regime for digital markets, by 2025 the UK will have conduct regimes for platforms including Google, Meta and Apple, overseen by the Digital Markets Unit.
Nested within could be a ‘fair bargaining’ regime for platforms and news groups, following Australia and Canada, whose lessons could be valuable to preserve platforms’ incentives to serve news. In Canada, platforms are refusing to pay to serve news links to their users, and plan to exit this form of content.
Financial transfers to UK news groups by platforms is among the new UK regime’s aims, but is unlikely to make up for the declining revenue trend of local news provision whose sustainability is most at risk.