UK residential communications market revenue growth dipped to 2.1% in Q3. While volume growth continued to decline, the main driver was weakening ARPU growth, which was partly caused by price rise timing effects but there was also an underlying contribution

Longer term, slowing market volume growth has contributed to the market revenue growth drop over the last year, but slowing ARPU growth is also playing its part, and maintaining ARPU growth is becoming a major challenge for the operators given the discounting required to win and retain customers

Looking forward, price rise timings will continue to cause short-term revenue growth fluctuations, but the main long-term factor will be the trajectory of subscriber ARPU, and whether any growth in this can be sustained

Mobile service revenue growth dipped this quarter but this was likely entirely due to the predictable (and predicted) impact of the abolition of EU roaming surcharges.  On an underlying basis, growth improved

BT/EE extended its lead in both service revenue and contract subscriber growth terms. EE’s substantial investments in network quality and customer service have driven returns to scale, and its multi-brand approach is working well

Contrasting with the returns to scale seen at EE, TalkTalk’s MVNO has suffered the reverse of this, unable to break-even despite peaking at just shy of 1 million customers, and deciding to retreat to an agency model.  Sky Mobile is performing respectably well in context, but may be headed for scale issues itself

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

Sky's full year results for fiscal 2017 are largely in line with company guidance on revenues, costs and synergies given on Investor Day last October, while the company expects further progress in fiscal 2018

Operating profits were badly hit by the massive increase of £629 million in annual payments to the Premier League, however, due to revenue and cost efficencies elsewhere, they fell by just £97 million, testifying to the overall strength of the Sky business

The results presentation revealed a clear sense of strategic direction, supported by much glossy and positive detail, yet revealed relatively little about the headwinds that Sky and other pay-TV operators now face, including the evident decline in Sky UK DTH subscriptions

A Netflix-like subscription model for console based video gaming is a big step closer with Microsoft launching a clear and easy Xbox subscription game solution, and it may even work

Sony’s strategy for premium online services across all its businesses remains muddled and complicated, but could be fixed quickly: dropping game streaming is the first step, providing a lower cost subscription service is the second

Google’s admission that more curation in its games app store will be needed finally indicates a better understanding of the games industry, in parallel with the company’s efforts to win over other creative industries

UK residential communications market revenue growth dipped 0.6ppts in Q1, from 3.3% in the previous quarter. This was mainly driven by ARPU weakness arising due to the timings of Sky and Virgin Media’s price rises, but weakness also stemmed from the sustained decline in broadband volume growth and continued new customer price competition

In competitive terms, BT and Sky suffered as a result of communicating price rises in the quarter, Virgin Media had a strong quarter if not quite as good as it was expecting, and TalkTalk manged to recover to positive retail broadband net adds at the expense of high marketing costs

BT, Liberty Global and TalkTalk issued profit warnings in the quarter, all of which were at least loosely related to increasing pressures in the consumer market. We expect these pressures – a slowing broadband market, an expanding Virgin Media, and a stabilising TalkTalk – to continue

Sky delivered 5% year-on-year revenue growth over the first nine months at constant exchange rates, although operating profits fell due to several factors, most notably the massive step-up in UK Premier League TV payments under the new contract

On closer inspection, relatively weak UK & Ireland Q3 revenue growth compared with previous quarters largely reflects one-off special factors 

Otherwise, positive quarters for Sky Germany & Austria and Sky Italy and improving cost efficiencies suggest that the Sky Group remains broadly on track to deliver its Investor Day 2016 guidance objectives

Enders Analysis co-hosted the annual Media & Telecoms 2017 & Beyond conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 2 March 2017.

This report contains the slides used by Tom Mockridge, Matthew Kirk, Andrew Griffith, and Geoff Moelis.

Enders Analysis co-hosted the annual Media & Telecoms 2017 & Beyond conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 2 March 2017.

The day saw over 450 senior attendees come together to listen to 30 leaders and senior executives of some of the most creative and innovative businesses in the media and telecoms sector, and was chaired by David Abraham.

This report provides edited transcripts of the presentations and panels, and you will find accompanying slides for some of the presentations here.

Videos of the presentations are available on the conference website.

The temporary cool-off in hype around VR following a very buzzy 2016 is not reducing the flow of investment and talent into the industry, notably in video production utilising 360Video technology; setting the stage for the development of a truly new entertainment medium

Fully immersive interactive worlds will continue to be the mainstay of the video games industry, while video entertainment will exist in a multi-track environment, with some genres (news, documentaries , natural history) making 360Video mainstream well before long-form narrative-driven entertainment

2017 will still be a challenging year for consumer device VR roll-out and mass market adoption; Oculus, Google, and Sony continue to seed the market, providing large scale funding and equipment directly to developers and content producers