The market looked superficially healthy in Q1, with revenue and broadband volume growth both maintained at 2%.
However, net adds trends suggest that consumers are becoming more bargain seeking, and prices have become more competitive into Q2.
The April price increases will support growth in the short term, but this boost may not last long if the cost-of-living crisis persists.
On 12 May 2022, Enders Analysis co-hosted the annual Media and Telecoms 2022 & Beyond conference with Deloitte, sponsored by Barclays, Financial Times, Meta, and Deloitte Legal
With up to 500 attendees and over 40 speakers from the TMT sectors, including leading executives, policy leaders, and industry experts, the conference focused on regulation, infrastructure, and how new technologies will impact the future of the sector
These are edited transcripts of Sessions 9 and 10 covering: the Metaverse, Authority in the Digital Age for publishers and closing remarks. Videos of the presentations are also available on the conference website
On 12 May 2022, Enders Analysis co-hosted the annual Media and Telecoms 2022 & Beyond conference with Deloitte, sponsored by Barclays, Financial Times, Meta, and Deloitte Legal
With up to 500 attendees and over 40 speakers from the TMT sectors, including leading executives, policy leaders, and industry experts, the conference focused on regulation, infrastructure, and how new technologies will impact the future of the sector
These are edited transcripts of Sessions 4-6 covering: European media, sustainability in the TMT sector, and advertising mega-trends. Videos of the presentations are also available on the conference website
The UK's cultural industries remain the strongest in Europe and digital distribution is a strong vector for the globalisation of British culture
The international reach and reputation of UK news providers is unparalleled, with the BBC, the largest news provider globally, reaching half a billion users weekly
Independent commissioning drives a dynamic ecosystem of TV exports with global clout—worth an estimated £3.4 billion—that remains stable despite Brexit
Sky continued to grow its UK revenue thanks to price rises, mobile customer additions, and a rebound from lost hospitality business in early 2021, but this was still outweighed by the recent reset of its Italian operation
Aggregation remains a core focus, with Paramount+, and Magenta Sport in Germany, added to Sky’s bundles, while fibre rollout will intensify with the launch of Sky Stream puck as a standalone device later this year
Declining buying power raises uncertainty over consumer behaviour: in previous recessions, pay-TV performed well, but today subscribers have more video options than ever before
The EU’s GDPR enforcers have ruled that IAB Europe’s framework for collecting user consent, a standard used by about 80% of sites on the continent, is in violation of the regulations
This is one of the clearest signs yet that regulation is starting to catch up with Apple and Google’s privacy push, as support for cookies and mobile ad IDs is due to end over the next few years
Publishers must prepare now by treating privacy as a core part of user experience and adopting a reader-first revenue model that also supports advertising in a trusted environment
Whilst we remain sceptical of the churn reduction benefits of fixed/mobile convergence, the pandemic and a more astute approach from the operators is enhancing the case for it in the UK.
Creating the impression of a giveaway whilst minimizing the effective discount is key, as is extracting any loyalty and cost benefits.
Even if well executed, any upsides are likely to be modest. Operators are right to keep discounts to a minimum and to avoid M&A premia predicated on fixed/mobile convergence synergies.
Market revenue growth accelerated to just under 2% in Q4, with broadband growth holding up despite the ending of most pandemic restrictions.
Backbook pricing pressure should continue to retreat in 2022, and ultrafast speed premia should also bolster ARPU as FTTP roll-outs accelerate.
The price increases due in April will further support growth, with BT in particular to benefit, and all will have to be wary of customer backlash.
Sky’s performance across 2021 significantly improved, driven in Q4 by a nice c.5% growth rate in UK consumer revenues and the advertising rebound, but effects of the pandemic are still being felt with EBITDA down 30% on 2019.
The decline in Group revenue accelerated in Q4 due to the severe shock to the Italian operation from its loss of most premium football coverage, although we see upsides in a possible rights reshuffle.
In 2022, Sky can leverage growth vectors including bigger content bundles, Glass, advertising innovations and broadband. Consolidating SVOD and telecoms markets may be more favourable to price increases.
Alongside freezing the licence fee for the next two years, the government made it clear that it believes the fee is no longer the optimal mechanism to fund the BBC, demonstrating a willingness to remove it in 2028
What seems to be the government's preferred replacement, a subscription, is not ideal: there are structural issues that mean it would not be possible to have a service that all could subscribe to without a costly switchover
Furthermore, a subscription would undermine a number of tenets of public service broadcasting, most notably universality, breadth of programming and representing the diversity of Britain—naturally a subscription service would pivot to commercially efficient content that targets its subscribers and those most likely to subscribe