Market revenue growth of 2% in Q3 was slightly lower than the previous quarter, but remained firmly positive at least.
The dual impacts of slowing broadband volume growth and consumer price sensitivity will likely hit volumes and ARPU even harder over the tough winter to come.
Inflation-linked price increases will give some operators a boost next year, but their very high levels (c.15%) will be hard to manage during a cost-of-living squeeze.
By firing Bob Chapek, the board responded decisively to a stream of negative press coverage and unexpected weak results.
Iger's priority should be unwinding Chapek’s revenue and distribution structure that separated creatives from investment control.
What will be the next transformational deal for Iger-led Disney? Strategic gaps include a youth audience pivoted towards social media and games
Vodafone’s downgraded guidance is due to its woes in Germany rather than the economy. There is some limited reassurance that this will turnaround soon.
It remains challenging for Vodafone to achieve its revised FY guidance with a 7ppt improvement in underlying EBITDA growth required to get there.
Leverage and cash-calls are much improved, and the dividend looks assured, but the Vantage and German deals mean escalating pressures on EBITDA.
Cost-of-living pressures and tougher fixed competition drove VMO2’s revenues (just) back into negative territory this quarter.
Synergy benefits, however, delivered impressive EBITDA growth (+5%) with more to come as the Virgin Mobile MVNO shifts on-network next quarter.
We struggle to foresee convergence becoming the company’s next growth driver as trailed by the CEO, but the mobile outlook is fairly robust and there are steps that can be taken to shore up the pressurised fixed business.
Disney’s core competitive advantages reside in its IP stock and in consumers’ lifelong affection for its brands, but the company faces a growing challenge from much larger tech platforms, pushing up the costs of production, sports rights and access to future IP.
Disney’s resources for content expenditure are now flat. The fat profit contribution from US linear channels may soon start to decline whereas direct-to-consumer losses at Disney+, Hulu and ESPN+ are still increasing, and the recovery of parks could be capped by the worsening economy.
With its recognisable IP, Disney will benefit if global video viewing continues to coalesce around fewer, bigger series, although a weak future cinema market— which Disney dominates and leverages—will impair the creation of big, new IP properties. China and India’s potential may not materialise soon.
After two quarters losing net subscribers (-1.2 million), Netflix grew subs in Q3, adding 2.4 million (up to 223 million), driven by APAC but with all regions back to an upward trajectory. The company's attempt to focus attention off subs and onto revenue hit a snag, though—due to F/X this was down quarter-on-quarter
Netflix's ad-supported tier will be launched in the UK on 3 November; while it will not alleviate churn it will increase the perceptual value of the more popular and expensive Standard tier. With BARB not measuring incremental reach and frequency of its commercial impacts, Netflix will still have a job to prove value to advertisers
The declaration of Netflix's UK revenue firms up our understanding of the company's paying base, and provides insight into the number of households that are getting the service for free—revealing the revenue potential of measures to counteract this freeloading culture, but also the prevalence of it
With major studios arguably over-indexed on SVOD, the stickier experiences of interactive entertainment and the metaverse will eventually form a critical pillar of studio D2C strategy, boosting subscription services and tying in closely with consumer products and theme parks.
Disney’s appointment of a Chief Metaverse Officer is good first step, demonstrating a strategic interest in the space. But other major studios remain cautious and distracted, with limited capability beyond licensing to engage in the metaverse for the next 24 months and possibly longer.
Meta will need to provide a strong guiding hand creatively and technically to ensure its new partnership with NBCUniversal is a success, and to evangelise the metaverse and its revenue model across the Hollywood studio content space.
Whether to allow a Vodafone/H3G merger is essentially a trade-off between range of consumer choice and costs of network duplication. With the need for the former diminishing and the latter increasing, the case for approval is strengthened.
H3G is in a negative spiral of small scale, low investment, and low returns. A merger would allow it to form part of a more credible competitor with a transformed returns profile—without rising prices or reduced industry investment levels.
The CMA’s aversion to mergers has been very stringent of late—an approach that risks deterring investment and compromising competitiveness. Consolidation in UK mobile is unlikely to happen without a change of mindset.
FAST services that include digital linear channels (FAST channels) appear to be experiencing solid growth in the US. In the UK, this success has been used to highlight a potential mechanism to diversify away from broadcast linear and SVOD
However, the growth potential of these services on this side of the Atlantic contends with a very different video market than the US—the free output of the PSBs remains prolific and of high quality, while prominence legislation is likely to tougher
Furthermore, overall viewing of long-form video content is declining. Any new FAST services will be fighting for a declining amount of screen time with poor content slates and little name recognition—however, growing demand for US content is an advantage
The pandemic years boosted many businesses selling services on subscription in the UK: work-from-home gave people more time and money to widen the services they enjoyed in the home, such as gaming, entertainment and music, also boosting engagement with trusted news
The cost-of-living crisis dented the number of subscribers to OTT SVOD and news services in Q2 2022. Broadband and mobile are must-have; bundles of services (e.g. Sky’s pay-TV and broadband or mobile) are more resilient; yearly and multi-year contracts prevent churn relative to monthly contracts; and services that cater to passions (e.g. football) are always need-to-have
Subscription (or supporter) media and news services reaped the demand for trusted news through the pandemic, but now face a tough challenge to their toplines from the economic downturn—and also to transition to a sustainable business model for media audiences, while advertisers are also feeling the heat