As more viewing is delivered on-demand and online, the jeopardy and immediacy of sport make it one of the few genres which will remain overwhelmingly live.

Shared national experiences that allow as wide an audience as possible to follow simultaneously are increasingly rare in a fragmented media landscape, and public service broadcasters are still the only media capable of providing them.

The listed events regime should not just be protected but at least extended to include live digital rights: although the vast majority can presently access these events via DTT, changing viewing habits, eventual DTT switch-off and a shift in how rights are packaged means that action should be taken now to guarantee continual full, free availability.

Service revenue growth was up just 0.1ppts to 2.0% this quarter, as price rises in the UK and the peak of the roaming boost offset weakness elsewhere.

Price increases to combat inflationary cost pressures are gathering momentum—a potential revenue cushion as roaming tailwinds diminish and challenging economic conditions weigh.

Vodafone is battling strategic issues in most of its main markets—significant change in strategy will be required from the new leadership.
 

ITV’s total advertising revenue (TAR) across the first nine months was down 2% year-on-year, £25 million less than the company had expected at the end of July. This was still up on pre-COVID levels. With a strong Q4, TAR is expected to be down 1.5% across the year, while high inflation of costs and greater reliance on Studios will ultimately challenge margins

ITVX will be fully launched on the—slightly delayed—date of 8 December 2022. We are confident that it will be a step change for ITV's online engagement, however we believe that ITV may be understating its potential cannibalisation of linear

ITV Studios appears to be beating the market, and there may never be a more opportune time for its mooted partial sale: across the industry inflation will make margins difficult to grow while overall content demand is plateauing at best 

With viewing to traditional broadcast TV continuing to shrink rapidly, especially among under-45s, our latest forecasts revise a new low for broadcasters’ audiences: falling to just half of all video viewing in 2027, down from 63% today

Long-form, broadcast-quality content will increasingly be viewed on SVOD-first services (e.g. Netflix, Amazon, Disney+) as online habits solidify, especially among older audiences. Platforms offering different content (e.g. YouTube, Twitch, TikTok) will continue to grow their share and will also expand total watch-time

We forecast that under-35s will spend just a tenth to a fifth of their video time with broadcasters’ traditional long-form content five years from now, versus a third to a half for 35-54s and 85% for over-65s

With major studios arguably over-indexed on SVOD, the stickier experiences of interactive entertainment and the metaverse will eventually form a critical pillar of studio D2C strategy, boosting subscription services and tying in closely with consumer products and theme parks.

Disney’s appointment of a Chief Metaverse Officer is good first step, demonstrating a strategic interest in the space. But other major studios remain cautious and distracted, with limited capability beyond licensing to engage in the metaverse for the next 24 months and possibly longer.

Meta will need to provide a strong guiding hand creatively and technically to ensure its new partnership with NBCUniversal is a success, and to evangelise the metaverse and its revenue model across the Hollywood studio content space.

Whether to allow a Vodafone/H3G merger is essentially a trade-off between range of consumer choice and costs of network duplication. With the need for the former diminishing and the latter increasing, the case for approval is strengthened.

H3G is in a negative spiral of small scale, low investment, and low returns. A merger would allow it to form part of a more credible competitor with a transformed returns profile—without rising prices or reduced industry investment levels.

The CMA’s aversion to mergers has been very stringent of late—an approach that risks deterring investment and compromising competitiveness. Consolidation in UK mobile is unlikely to happen without a change of mindset.

European mobile service revenue growth increased by 1ppt to +1.6% this quarter, with this improvement largely driven by higher-than-inflation price increases in the UK.

The outlook for Q3 is mixed with an increased roaming boost expected, but the B2B sector will remain challenging and the impact of the rollout of out-of-contract notifications in EU countries will mount.

There are signs of some upward pricing movement beyond the UK, particularly in Spain as the operators seek to cushion the blow of rising costs and inevitable economic pressure.

• ITV’s H1 external revenues were up 8% YoY (to £1,679 million) with Studios up 16% (to £927 million) and Media & Entertainment up 4% (to £1,065 million)—ITV suggests that FY 2022 will beat 2019 for revenues. H2 will face some tough 2021 comparators but Q4 will reap the rewards of a winter FIFA World Cup
• ITVX is to launch in Q4, with the narrative being that it will target commercially desirable lighter ITV viewers, while causing little cannibalisation of the more monetisable linear platform—enticing these viewers seems difficult, especially given that the ITVX interface will be unashamedly average
• ITV remains “mindful” of macroeconomic and geopolitical uncertainty, but Carolyn McCall stated that the company has not seen anything that indicates an impact on advertising

With the publication of the Media Bill (expected to include details of the sale of Channel 4) seemingly delayed to at least after the recess (September), privatisation appears to now be on ice.

2021 was another demonstration of Channel 4’s resilience—showing record-breaking revenues, high content spend and encouraging rates of digital transition—setting a credible platform upon which the broadcaster's PSB credentials can be placed.

Some queries remain: Channel 4’s main viewing drivers are ageing, with fewer new shows being commissioned to replace them. Online engagement isn’t a substitute  for declining linear viewing, while digital advertising growth may get harder with more players, such as ITV and the streamers, entering the space in earnest.

With the cost-of-living crisis expected to worsen over the coming months, the telecoms operators must walk a fine line—support customers but protect their financial performance in the face of a likely recession and rising costs.

We are likely to see weakness on the B2B side and consumers will look for ways to reduce out-of-bundle spend, seek retention discounts and spin down to lower speed tiers and data bundles, but we expect that dropping services completely will hold limited appeal.

Proactive retention activity and promotional pricing is likely to pay off more than slashing headline prices, and will help to avoid a damaging price war—a far bigger risk to their revenues than spin-down.