When we look back at consumer expenditure on pay-TV and alternative entertainment options during past economic downturns across major countries, we find a broad confirmation of the industry’s comparative resilience.

Also found are variations between services sold through annual contracts and cancel-anytime rivals, a negative impact on big-ticket products, and opportunities for substitutional services.

Unique features in the current crisis include the suspension of sport broadcasts and an SVOD-rich offering which widens consumer options. If hardship persists, incumbents like Sky could face tougher times than during the financial crisis.

European mobile service revenue growth improved by 1ppt to -1.2% primarily as a consequence of diminished competitive intensity in France. Trends elsewhere were largely flat.

The mobile sector is playing an important role in tackling COVID-19 and is likely to be relatively resilient in the short term with a broadly neutral financial impact. Longer term it will be exposed to the fortunes of the economy.

There are reasons to believe that the improvement in trends evidenced in the last quarter may continue as churn reduction takes the heat out of some markets, cuts to intra-EU calls annualises out and for most countries, end-of-contract notifications will only begin to impact in 2021.

 

In a likely scenario, the suspended football season could be concluded in empty stadiums in a June and July rush, nevertheless with severe financial consequences.

Pay-TV incumbents like Sky face limited risk—at worst they lose four months of subscription revenue for games already paid for. No-contract services such as DAZN must anticipate a more severe shock. 

To limit disruption, pain will have to be shared across the supply-chain with players’ pay first in line. But fast coordination in a continent-wide, multi-layered industry is challenging; in places, the issue may turn political.

 

Free-to-air broadcasters, pay-TV operators and OTT services all have a role to play in serving sports audiences.

DTC services will enable sports organisations to engage with and learn about fans.

The industry needs to continue adapting to younger generations’ viewing preferences, particularly if it is to have a chance of combatting piracy.

Despite operating in a challenging market, Sky has continued to increase revenues, with the resilient performance of its direct-to-consumer and content businesses offsetting the disappointing drop in advertising income.

Across FY 2019, EBITDA was up 12.2%; profit growth driven by a significant reduction in “other” costs as large one-off effects disappear and cost-cutting continues.

Extended distribution deals with Netflix and WarnerMedia will protect Sky’s content proposition for the coming future, as would the mooted integration of Disney+.

Comcast’s new, on-demand service, launching in April, is an attempt to break NBCU’s unsustainable dependence on sales to Netflix and other SVODs. Peacock provides a path of digital transition for advertising-funded TV with a revamped low-load, high cost-per-thousand model.

Reach will be built with a free online tier and distribution to Comcast subscribers. Peacock seeks carriage from other pay-TV operators, with which reciprocal deals would make sense (i.e. HBO Max on Comcast alongside Peacock on AT&T’s platforms).

In Europe, where Comcast has no existing major free-TV offering to transition, launching Peacock will be challenging but could present Sky with ideas to counterweigh Netflix on its own service.

Vodafone UK’s new broadband product is not very competitively priced compared to the offers from Carphone Warehouse and Orange, costing £5-10 a month more than the nearest equivalent packages

Orange UK’s converged mobile and broadband brands and ‘free’ broadband offer has not proved a big hit with consumers, with Orange reporting just 25,000 DSL net additions for the September quarter, likely to be below 5% market share

In a fit of pique over increasing subsidies, Vodafone UK is dropping Carphone Warehouse (CPW) as a distributor, and moving exclusively to Phones4U with lower subsidy levels and volume guarantees, while Orange is reportedly also considering its position with CPW

Ten years of fierce and implacable rivalry between Canal+ Group and TPS, the two French pay-TV operators, is expected to end in November 2006, when they close their merger deal and Canal+ France emerges. This report examines the strategic rationale for pay-TV consolidation in the French TV market, where digital terrestrial TV has recently launched and where TV-over-DSL is rapidly being deployed, as well as the potential for the currently low pay-TV margins to rise