Market revenue growth bounced back to 4% in Q2, the first positive growth for the sector since 2019 .
Most of the improvement was however temporary sports channel bounceback, with underlying growth still negative.
Prospects are nonetheless healthy, with price increases now regular, backbook pressure annualising out, and ultrafast boosts growing.
VMO2’s inaugural results reinforced the company’s focus on profitability with EBITDA growth of 6% and record margins. Flat revenues year-on-year benefited from the annualisation of the COVID-19 hit but incorporated little by way of rebound.
Much remains to be seen in terms of strategy but indications thus far are reassuring with B2B a clear focus for revenue growth, and the benefits of direct distribution feeding through to profitability.
The company’s decision to build an overlay full fibre network is a bold, but smart, move—allaying justified obsolescence fears about its network, enhancing strategic flexibility, and reducing its cost base.
Viewing habits are changing but live is still central to the TV experience
Television’s biggest shows are amongst the most timeshifted, and therefore have an outsized impact on the decline of live viewing debate
Viewing—not just of news and sport—is still overwhelmingly live, despite differences across genres and broadcasters
With the O2/Virgin Media merger now approved, VodafoneZiggo in the Netherlands may hold clues to their likely approach to the market although their starting point is not quite the same and some lessons may have been learned.
We remain sceptical of the merits of discount-led convergence strategies. The pandemic, however, has eased the route to cross-selling and strengthened the case for convergent technologies.
Virgin Media’s network strategy will be key with significant risks from wholesaling their cable network and from expanding their footprint.
Market revenue growth improved to -1.4% in Q1 2021, a partial recovery being better than at any point in 2020, but still worse than at any point in 2019.
Next quarter the sports channel suspensions will lap out, driving strong (but temporary) year-on-year growth.
Longer-term revenue growth recovery will need backbook pricing pressure relief, which will start in Q2, and demand for ultrafast broadband.
Virgin Media’s subscriber boom continued into 2021, despite a marked price rise in Q1, benefiting from lockdown and continued demand for higher speed broadband.
ARPU remained weak in Q1, suppressing revenue growth, but this will recover (somewhat) in Q2 as the price rise takes effect, countering the current disconnect between volume and revenue growth.
The merger with O2 is set to complete in June, with much operational pre-merger preparation already done, but the key strategic questions appear yet to be decided.
Apple is bringing in privacy changes on iOS that could hurt ad-funded apps.
Responding to platforms’ legitimate push for user privacy is a trial for regulators in the midst of building new online antitrust regimes.
Antitrust rulings are chipping away at the App Store’s stringent terms of use, but reforms will keep it at the centre of the iOS universe.
Despite relying on a narrow IP base, US content production is booming, overwhelming other markets and seeking alternative distribution to cinema.
Responding to the rise of Netflix and Amazon Prime, studios seek to shift distribution from wholesale to retail—but only Disney may succeed.
Most content is likely to remain accessed by consumers through bundles. Provided they engage with aggregation, European broadcasters can adjust to the new studio model.
Market revenue growth sunk back to -3% in Q4 from -2% in Q3, with further backbook pricing and lockdown effects to blame .
Backbook pricing will improve with numerous price increases announced, but these will only start to take effect in Q2 2021.
Demand for broadband and ultrafast looks promising, but will also take time to filter through to revenue, with Q1 again lockdown-affected.
Goods ecommerce accelerated in 2020 by four years above trend to reach 28% of retail sales (excl. fuels) from 19% in 2019. We anticipate that ecommerce in 2021 will remain in the same share range of 27-29%.
Food and drink grew faster than any online category in 2020, doubling to over 10% of associated sales. Aside from food and drink, the agony of zero sales on the shuttered high street continued, with over half of all sales being online in 2020, likely persisting in Q1 2021.
Offline retailing will recover due to deconfinement and the share of ecommerce will edge down in Q2 2021 and thereafter, but these new shopping habits will be sticky and anchored by persistent work-from-home, driving all retailers that are left standing to massively adopt online channels and associated advertising media.