UK football rights values have pulled further away from European peers in a stagnant market, as telcos have withdrawn and tech companies remain selective bidders.
Sky and Canal+ have tied down key contracts until towards the end of the decade, while DAZN now has domestic rights for four of the top five European football leagues.
Tech players want live sport, but have distinctive demands and without new monetisation models they will not challenge pay-TV incumbents.
The UK altnets collectively lost over £1bn in 2023, with most metrics unrealistically distant from what they need to be for a sustainable model, particularly the smaller retail-focused operators.
Consolidation is essential for survival, and CityFibre at least has a reasonable case for long term sustainability with a wholesale model and Sky as a customer, and looks the most viable altnet consolidator in our view, with VMO2/nexfibre able to pick up the pieces should the sector fail.
A lack of long-term viability and related financing difficulties will dramatically slow network roll-out, reducing the altnet pressure on the rest of the sector even if consolidation improves penetration levels.
As Netflix transitions towards a reporting cadence that omits quarterly subscriber numbers, the focus is on revenue (+15% YoY, to $9.8 billion) and margin (+8ppts YoY, to 30%), which remain buoyant. The company has guided that 2025 revenues will be $43 to $44 billion (+$4 billion YoY), mostly due to subscriber growth
Netflix's advertising-supported tier is dragging its ARPU—however, given its important future growth role, we would expect it to start influencing the direction of the streamer's content slate
Despite its expansion into new genres, Netflix's UK viewing has further narrowed around drama and films: however, live sport, British formats and soaps could move the needle in the future
In the next fixed line regulatory review—TAR 2026—Ofcom is likely to maintain light regulation on Openreach’s pricing levels, while also maintaining strict restrictions on its pricing structures, which both help altnets.
On other matters, none of the interested parties (Openreach/altnets/ISPs) look like getting exactly what they want, but by and large the industry will likely get what it needs—regulatory stability with a broadly pro-investment slant.
The next TAR in 2031 is likely to be more dramatic, but by our estimates, even a full return to cost-based charging will not result in significant wholesale price cuts, which is likely to be a relief to longer term investors in BT and the altnets alike.
The spatial computing ecosystem is on the uptick with the wider availability of head mounted devices (HMD). Apple and Meta’s commitment to developing HMDs is existential to conquer the enormous technical hurdles these devices continue to face.
Apple has chosen to maroon the Vision Pro with a lack of controllers and other design choices making it reliant on mostly passive entertainment. In total contrast, Meta’s deep engagement in gaming and 3D experiences showcases the potential for the HMD category.
Live sports is the outstanding use case for TV experiences on VR headsets, with exclusive NBA VR programming on Quest bringing new levels of immersion and presence, while gaming, and its developers, will still remain the dominant driver for VR and MR for the rest of the decade.
Netflix audiences gravitate towards lean-back, family films and comedies, marking a notable contrast with the kinds of TV shows which get the most viewing.
Films and TV are watched differently on Netflix: films draw more repeat viewing, are more of a communal experience and are highly sought after on weekends.
This explains why Netflix—even without a consistent, broad theatrical strategy—invests heavily in film: it brings in a discrete audience and boosts engagement for most viewers.
Both subscriber and ARPU growth are showing clear signs that they are topping out. We expect increasing volatility in both metrics moving forward as low-ARPU subscriber additions tug against price hikes and churn-cycling in wealthier regions
Many of the studios’ streamers are now flirting with profitability thanks to cost-cutting efforts, while cord-cutting only seems to be accelerating
Almost 50% of streamer sign-ups are opting for the ad-tier. However, it will be some time before ad-tiers become a ‘meaningful’ revenue stream
CityFibre has announced a deal to supply the second largest UK ISP Sky with wholesale broadband services, doubling its addressable target market at a stroke, in a blow to Openreach.
This may be just a foot in the door for CityFibre, but it is a critical one, and puts it firmly in the driving seat for altnet consolidation. There are also positives for VMO2 and other altnets hopeful of an eventual wholesale deal with Sky, and for retail ISPs now that the altnet sector is pitching towards wholesale away from retail.
While this is obviously bad news for Openreach, we see it more as an absence of a potential positive than something that might actually worsen current trends, and there are mitigating positives for the wider BT Group.
Market revenue growth was just positive at 0.2% in Q2, as lower price increases were mitigated by some temporary ARPU gains.
Growth is likely to drop negative in the rest of year however, with continued weak volume growth compounded by temporary ARPU gains unwinding.
Pricing structures differ quite widely as regards landline offers and out-of-contract pricing, and all could benefit from adopting best practice, a marginal gain worth pursuing in a tough market.
Sony PlayStation 5 and Microsoft Xbox unit sales crashed in the last quarter, despite promotional discounting. Neither company appears able to reverse a clear consumer shift away from fixed consoles.
Nintendo Switch outsold Xbox and nearly matched PlayStation sales, even with the Switch 2 set to launch in 2025.
A radical change in hardware strategy and leadership will be the best solution for Microsoft to demonstrate a growth narrative following its acquisition of Activision. Gamescom this month may provide more clues.