The development and utilisation of streaming technologies has allowed major SVODs, such as Netflix and Amazon, to attain a growing proportion of video viewing

However, tech is just one of the advantages held by these services: plateauing content expenditure, the inability to retain IP and inconsistent regulatory regimes hamper the efforts of the UK’s public service broadcasters

The localised nature of audience tastes, as well as the diversity of PSB offerings remain a bulwark to aid in the retention of relevance but content spend cannot lag

UK residential communications market revenue growth bounced up to 3.6% in Q2, a full 1.4ppt improvement on the previous quarter and reversing the downwards trend of the previous two quarters. However, this was entirely driven by price rises at BT and Sky, with the ongoing market volume growth decline continuing at pace

In competitive terms, TalkTalk was the only operator able to improve its broadband net adds on a year earlier, and Virgin Media was solid with only a modest decline, leaving BT and Sky shouldering the worst of the slowdown, albeit with neither company doing particularly poorly given the market context

New customer pricing remains tight, with Virgin Media in particular becoming more competitive. Looking forward, we expect volumes to continue to slow, and for the pricing boost enjoyed in Q2 to largely drop out next quarter, leading to a renewed revenue growth slowdown

Channel 4 revenues and content spend hit record levels in 2016, but the company faces a declining TV advertising market in 2017 due to a weaker economy and competition

The company’s ability to deliver its unique remit to audiences and producers is also under pressure from Government proposals to move staff outside London

Because Channel 4 can only commission, a move will not stimulate a creative cluster. Risks to the remit include the loss of talent and lower content spend due to higher opex 

Virgin Media’s subscriber figures in Q2 were a little mixed, with total homes and broadband figures weaker than a year earlier, but pay TV much stronger. ARPU growth fell though, largely due to price increase timing effects, leading to a modest dip in revenue growth

Project Lightning premises passed during the quarter rose to 127k, making at least some progress towards upping its run-rate after changing its roll-out management team and approach, the company declined to give indications of how this will evolve

The broader market context is still one of slowing broadband volume growth, and Virgin Media continues to take market share, being the fastest growing of the ‘big 4’ in both subscriber and RGU volumes

BT Group revenue returned to growth, at least temporarily, helped by overlapping price rises in consumer, one-off regulated price cuts on leased lines annualising out, and mobile handset sales improving

Regulatory news was unusually positive, with Openreach taking the initiative on FTTP, and BT winning an appeal against damaging leased line regulation, which may end up being significantly eased

BT continues to do well in consumer and struggle in business markets, with the ongoing deceleration in the consumer broadband market the main cloud on the horizon

Across Europe, markets are becoming more competitive. Incumbent pay-TV paltforms (e.g. Sky or Canal+) face increasing threats from both internet-based services (e.g. Netflix and Amazon), and telecoms operators

Telecoms providers are proving the most potent challengers as they enter the premium football rights market to create attractive triple and quad play bundles – examples include BT, SFR and Telefónica. The latter is now the main pay-TV operator in Spain whereas France’s Canal+ has entered into a strategic alliance with Orange

Across the top five markets (UK, France, Germany, Spain, and Italy), Sky remains the leading operator with an estimated 21.5m video subscribers, twice as many as Netflix

TalkTalk sustained positive broadband net adds in the June quarter, adding 20k to its base, largely driven by reduced churn, which was largely driven by re-contracting a large proportion of existing customers onto its new cheaper bundles

Unfortunately, this had a negative effect on revenue growth, with Group revenue growth (ex-carrier) dropping to -3.2%, as the new cheaper bundle adoption diluted ARPU, but the company remains confident that revenue growth will turn positive for the full financial year as the ARPU dilution effect annualises out

The company recently announced a price rise due in August of around 5-6% for customers not on its new cheaper bundles (around 38% of its total broadband base), which will help with the ARPU turnaround, but may make maintaining positive broadband net adds more challenging

The US scripted content boom is spilling over into Europe: Free-to-air TV drama ratings have proven resilient but as costs and audience expectations have risen budgets are under pressure, necessitating flexible co-financing arrangements with American broadcasters, and Netflix and Amazon. Pay channels have boosted output—with uneven results

Long-term IP control is a key factor behind independent production consolidation, led by broadcasters seeking a secure stream of content and diversification away from advertising

Notable developments include the new wave of Berlin-based, internationally-financed series, the rise of domestic French content and Sky Italia’s edgy originals, Telefónica’s giant leap into Spanish dramas, and the continuation of Britain as an export powerhouse

The debate over the entitlement of free-to-air PSBs to retransmission fees from pay-TV platforms has simmered for the last few years, yet promises to boil over once the Digital Economy Act 2017 (DEA 2017) comes into force; as expected in late July/early August

The repeal of section 73 of the Copyright Designs and Patents Act 1988 (CDPA 1988) has removed a barrier to negotiations between the PSBs and the cable operator Virgin Media over retransmission fees, seen by some as the thin end of a wedge for obtaining such fees across all pay-TV platforms

However, pressing for retransmission fees could have the opposite effect of what the PSBs – in particular the commercial PSBs – wish for, threatening as it does to undermine the principles of universality and free access at the point of use, so long the bedrock of public service broadcasting in the UK

The first half of 2017 has seen the announced departure of three CEOs from the commercial PSBs within the space of less than two months: David Abraham of Channel 4 (14th March), Rob Woodward of STV (25th April) and lastly Adam Crozier of ITV (3rd May)

Responding to the challenges of digital switchover and the advertising recession of 2008/09, as well as their own specific company issues, one of the first tasks for all three CEOs has been to raise staff morale

The last seven to ten years may have been taxing at times. The next seven to ten promise to be no easier, and may yet be harder, as the successor CEOs chart their way through the continuing transformation of the UK digital landscape