Market revenue growth improved to -2%, after the sport-affected -6% last quarter, but was still low by historic standards.
Backbook pricing pressure is still hitting the market, and this will not improve until 2021 at the earliest.
Demand however looks strong; broadband adoption has re-accelerated, and the early signs of ultrafast adoption are encouraging.
In this report, we examine the completion rates of every scripted series since 2018 across all the major UK broadcast channels.
Comparing scripted programmes across different channels by overall viewing is difficult as these numbers are affected by promotion, prominence, competition, the quality of online player UIs and availability.
The rate that series are completed—viewing of the final episode as a proportion of the first episode—eliminates these and allows comparison.
Despite numerous examples of critical acclaim for BBC Three programming over the last couple of years, the evidence suggests that its audience has collapsed since the closure of its linear TV channel in 2016.
Annual viewing minutes of BBC Three programming are down by more than 70% compared to its last year of linear TV broadcasting, and weekly reach amongst its target demographic of 16-34s has fallen by c. 70%—a loss far greater than those of other TV channels.
More difficult to assess are the effects of the shift in content strategy. Comedy programming, for example, proportionally shrank in terms of the total volume available while receiving a greater share of consumption, in direct contrast to factual content’s fate.
Market revenue fell 6% in Q1 2020, largely due to lack of sports revenue (which will bounce back), but backbook pricing woes also hit.
Broadband volume growth accelerated though, and may accelerate further as supply constraints ease.
The increase in working-from-home may also enhance demand for ultrafast, the best hope for a return to industry revenue growth.
TalkTalk started its new financial year with revenue growth declining to -8% in Q1, although this is partly lockdown-related, and costs have also declined as churn plummeted.
While backbook pricing continues to be a challenge, new customer pricing continues to firm, which makes its expectation of stable/growing EBITDA for FY2020/21 possible albeit still difficult.
The company expects to launch full fibre products from Openreach imminently, and from CityFibre before the end of the year, with the adoption and eventual economics of these crucial to its medium and long-term future.
Admissions and box office revenues in 2020 will be the lowest in over three decades. The pandemic forced the closure of theatres, putting pressure on cinema to a degree unlike ever before.
The reasonable success of the straight-to-TVOD releases under lockdown has some studios suggesting TVOD distribution will live alongside theatrical in the future. However, simultaneous releases are unacceptable for cinemas and TVOD’s sub-optimal financial reality means theatrical release will remain essential for most films.
TVOD distribution will temporarily play an expanded role, while SVOD will pursue its climb up the distribution chain and big studios will assert their increased power to negotiate more favourable terms with cinema owners.
Premium sports subscriptions are the primary sector weakness in the current crisis, and they look set to drive fixed operator revenues down 10% next quarter and Sky’s EBITDA down by 60%.
As lockdown eases, latent broadband demand can be more easily sated, and sports subscriptions will bounce back from the September quarter. A surge in working-from-home is likely to increase both the quantity and quality of home broadband demand, with ‘failover’ mobile backup also likely to be of greater interest.
Openreach will benefit from accelerated demand for full fibre, converged operators will be best-placed to offer mobile backup for broadband, and operators with a strong corporate presence will most easily target demand for home-working products.
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.
Market revenue growth plummeted to -2% in Q1 2020, with a lack of premium sports pay TV revenue the biggest factor.
The lockdown is also reducing churn and firming up pricing, but it is unclear how long this will last post-lockdown.
Pay TV revenue trends will continue to dominate next quarter; thereafter the battleground will move to ultrafast.
TalkTalk grew EBITDA by 10% in 2019/20, an impressive cost cutting driven result, with revenue and gross margin falling as the company struggles with the move to high speed.
The company is cautious on 2020/21, indicating only stable EBITDA citing CV-19 related pressures, although the lockdown has also brought much lower churn and an improving price environment.
The move to full fibre could prove challenging in the longer term, but it also brings an opportunity to rebrand away from a pure price focus, the source of much of TalkTalk’s challenges.