Whilst we remain sceptical of the churn reduction benefits of fixed/mobile convergence, the pandemic and a more astute approach from the operators is enhancing the case for it in the UK.

Creating the impression of a giveaway whilst minimizing the effective discount is key, as is extracting any loyalty and cost benefits.

Even if well executed, any upsides are likely to be modest. Operators are right to keep discounts to a minimum and to avoid M&A premia predicated on fixed/mobile convergence synergies.

Streaming had a strong 2021 with royalties to rightsholders, labels and music publishers increasing by 24% to $16.9 billion (IFPI). Spotify drove the segment’s rise as the leading service by users and subscribers (422m and 182m) followed by subscription services Apple Music and Amazon Prime Music, while YouTube is both ad-supported and subscription

Spotify’s 2021 revenue growth of 22% was powered by user growth (+18%) around the world on the subscription (16%) and ad-supported tiers (19%). User growth represented a deceleration from the pandemic-induced exceptional rise of 27% from 2019 to 2020

Spotify reports royalties generated by artists on its Loud and Clear platform. The number of artists in 2021 generating material revenues—over $10,000—increased by 24% to 52,600. 28% are ‘self-distributing artists’ using services such as Distrokid, TuneCore, CD Baby—the number almost trebled since 2017

European mobile revenue growth was zero for the third successive quarter with better mobility but less roaming upside, some B2B weakness, and stronger competitive intensity in the Italian and Spanish markets

Q1 should evidence some similar trends but the impact of out-of-contract notifications will begin to emerge and roaming looks set to become a significant boost from Q2

Consolidation fever continues to dominate the headlines though this is set against a backdrop of considerable uncertainty regarding regulatory approval

The UK government is on the cusp of introducing legislation that will force online platforms to monitor and mitigate the presence and spread of harmful and illegal content, in a regulatory first for big tech.

Affected companies should take note: they will need to prepare for a higher level of transparency and communication with regulators, and larger service providers will require expanded moderation, user verification and research capabilities.

Users should be protected as platforms balance complex competing duties. News publisher content has a carveout, but publishers may experience butterfly effects as the online environment is reshaped.

Alongside freezing the licence fee for the next two years, the government made it clear that it believes the fee is no longer the optimal mechanism to fund the BBC, demonstrating a willingness to remove it in 2028

What seems to be the government's preferred replacement, a subscription, is not ideal: there are structural issues that mean it would not be possible to have a service that all could subscribe to without a costly switchover

Furthermore, a subscription would undermine a number of tenets of public service broadcasting, most notably universality, breadth of programming and representing the diversity of Britain—naturally a subscription service would pivot to commercially efficient content that targets its subscribers and those most likely to subscribe

Mobile growth improved very marginally to -3.6% this quarter as roaming revenues were harder hit and competitive intensity bounced back, but usage recovered from the lockdowns in Q2 and cuts to intra-EU calls were annualised.

Italy’s fortunes took a turn for the worse as roaming hit particularly hard and Iliad resurged. After a spate of downgrades to the outlook last quarter, there were some tentative upgrades in Q3 although the tone remains cautious.

The diminished drag from roaming is the primary positive driver from here. Although lockdowns of some degree are in place in Q4, their impact will be less severe than those in Q2.

 

On 1 October, Google CEO Sundar Pichai announced $1 billion for worldwide news publisher partnerships for a novel News Showcase product, helping them to distribute their content to a new audience.

It is an important milestone: for the first time Google will pay publishers to curate content in the Google News app (initially), and to provide unpaywalled access to articles on publishers’ websites that users can click through to.

In so doing, Google is defusing the simmering conflict with publishers in major markets, and showing policy-makers its willingness to collaborate with a news industry facing existential threats.

Times Radio launches as an ad-free commercial speech radio service on DAB and online. By extending brand reach, it forms part of the marketing funnel to convert listeners into subscribers.

Radio is remarkably resilient for a traditional mass media, and this arrival will complement the strong commercial sector and the mighty Radio 4.

Timing will be a revenue challenge, but this bold, cost-effective, intelligently deployed experiment comes as the news industry is most at risk, a welcome innovation for readers and listeners—and for the sector.

European mobile service revenue growth strengthened very slightly to -0.3% this quarter but, with many positive and negative factors at play, it would be wrong to conclude that we evidenced a convincing improvement in momentum.

Most operators have reiterated their financial guidance in spite of COVID-19 but there is caution from Vodafone and those exposed to sports rights (BT and Telefonica).

The outlook benefits from continued lockdown measures (reducing churn and spin-down) and the annualisation of some financial drags from the middle of next quarter. However, competition in Spain remains intense and the sector is exposed to any economic downturn.

Journalism is on the precipice with more than £1 billion likely to fall off the industry’s topline. Several years of projected structural revenue decline in advertising and circulation have occurred in just the past few weeks of the coronavirus pandemic, with no letup in sight.

The UK’s rich heritage of independent journalism is at risk, with responses by Government and ‘big tech’ multinationals welcomed but ultimately inadequate. We make two further recommendations for engagement in this report.

Journalism enterprises from the small, local and specialist outfits through to national household brands will either fail or remain on a path to future failure.