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As smartphone ownership nears saturation in almost all consumer groups, the base for the UK digital economy is widening: media consumption continues to move to connected devices and use of consumer services on mobile grows

Ecommerce is now responsible for 75% of retail growth, steady even during periods of decline for the overall market

Google and Facebook take up almost 90% of gross online advertising growth this year, and the ecommerce and mobile service markets show early signs of platform concentration

ITV’s latest update points to a weak end to 2016 in advertising sales chiefly due to rising uncertainty post-Brexit, as the 1% year-on-year decline during the first nine months is expected to sink to 3% across the full year despite hitherto positive economic growth trends

ITV claims of outperforming the TV advertising market across the first nine months of 2016 are at odds with other sources, although the likely main cause of apparent underperformance – the large fall in ITV Main share of viewing in 2015 – will not apply in 2017, as ITV Main has regained some of the lost share in 2016

Weakening sterling exchange rates post-Brexit may have fueled rising inflation, lower consumer disposal income and falling TV NAR. But, it has also boosted ITV Studios revenues from international sales

US entertainment groups have not been disrupted by the rise of digital media. Long running franchises drive growth across diverse sectors, starting with pay-TV and SVOD. US television advertising is rising in line with GDP, while the online video ad market is flourishing, with much appearing alongside the majors' scripted content

Studios' cable channels are their most profitable assets, but M&As with distribution platforms, including Comcast's aquisition of NBC Universal, have usually failed to deliver synergies

The Donald Trump presidency could leverage hostile public opinion towards mergers to undermine the AT&T bid for Time Warner; but it could also stimulate M&As if it granted tech companies a tax break to repatriate profits. A more protectionist administration could also bring about a less benevolent attitude towards majors' foreign operations

Google’s recent hardware launch event was a confident assertion of an AI-led future where Google’s services are present for everyone, everywhere

With Google’s Assistant central to them, devices like the Pixel phone and Google Home smart speaker put pressure on Samsung, Apple and Amazon

If Google’s AI push is successful, it will evolve and strengthen the company’s role as a gatekeeper to content and services, fundamentally reshaping search marketing

The automotive industry is moving towards self-driving or autonomous vehicles (AVs) as a mass-market proposition, relying on a spate of partnerships with tech companies

Ridesharing in AVs is the obvious commercial application, with Uber and Google racing to launch pilots of their fleets

Many challenges lie ahead. AV developers claim current regulation is too restrictive, whilst regulators argue that mass market AVs do not yet meet safety standards

Amazon’s smart Echo speakers are coming to Europe, powered by a voice-controlled intelligent assistant, Alexa. Echo is thought to have found surprise success in the US

Alexa is best thought of as the most complete Voice User Interface (VUI) on the market. We expect VUIs to supplant graphical user interfaces for a variety of use-cases, in the home, on the move and in the car. Competition in this area is increasing

Alexa is being positioned as the Android for voice, moving beyond devices made by Amazon in an attempt to jumpstart adoption, and with developers building services on top of Alexa’s core voice platform

The battle in the US between Amazon, ecommerce giant, and Walmart, the retail titan, reflects the changing face of US retail as online drives growth

Amazon, the everything store, innovates on marketplace, warehouse and logistics, and customer tools like Prime, while Walmart fortifies in-store and builds on its strengths 

Walmart cannot overtake Amazon online, but it can defend its position as the largest US retailer as Amazon drives an ecommerce future for retailing 

 

 

 

European mobile service revenue growth worsened slightly in Q2, dropping to -1.2% after three consecutive quarters at -0.8%. Southern Europe significantly outperformed the North, reversing the regional trend of recent years

EU roaming rate cuts and the increase in SIM-only subscriptions were the two main negative, albeit temporary, factors with the former particularly impacting northern European operators with heavy roaming exposure and the latter more varied in its impact across the EU5

Mobile service revenue growth was thus quite robust given these factors, helped by price firming in a number of markets. Looking forward, while the negative factors are likely to continue in the short-term they will drop out in two years in the case of roaming cuts, and SIM-only, whose impact is mostly profit-neutral to operators, will also reach an equilibrium in due course, and the market's overall resilience is encouraging

BT Sport has seen a very clear positive impact from its first year airing the Champions League, with viewing up 60% year-on-year to June. Remarkably, its reach is now not too far off Sky Sports, though it still has some way to go in terms of consistent viewership.

Pay-TV audiences for the 2015/16 tournament were in line with previous years – an impressive feat – but free-to-air disappointed. However, BT should not be too concerned – it has established itself as a worthy pay-TV partner.

While BT’s execution has thus beaten reasonable expectations, BT Sport still carries a heavy net financial cost for BT, with debatable benefits. Yet, whatever the benefits may be, more viewers watching more often must surely help.

The UK retail market for digital movies has shown steady growth, but has not offset the decline in physical sales. While iTunes remains the UK market leader, Sky is clearly driving the growth with its Buy & Keep offering, backed up with the reassurance of physical product.

However, a move away from the collector mentality alongside the growth of a subscription mentality will affect long term prospects. This is not helped by the consumer proposition for digital retail, which remains disjointed, lacks inter-device operability and a clear consumer benefit.

Without co-ordinated efforts and investment from the studios, content owners and retailers to resolve these issues, we believe the opportunity for digital video retail in the UK is limited. Even with that, the EST market may never be as profitable as the DVD home video market.