We expect total TV ad revenues to decline 3.3% in H1 2019, partly due to a return to Earth following the idyllic conditions of the World Cup in June 2018.
Bad omens for advertising for H2 include the sagging economy since April and the Government’s impetus to achieve Brexit on 31 October, with or without a deal.
Our forecast remains a 3% decline for total TV ad revenues for 2019 as a whole, with the risk of a more serious downturn in 2020 in the wake of Brexit.
The UK mobile market posted its slowest growth in more than two years this quarter; just 0.5% service revenue growth although net adds were strong and churn was down
ARPU is under considerable pressure thanks to regulation limiting out-of-bundle spend which will exacerbate as the year progresses
Several other negative developments look set to be layered on the pressures this quarter, including a step-up in competitive intensity as 5G launches – with H3G’s pricing of unlimited data a sign of a resurgence in its aggression
The UK government is now consulting on a wider TV advertising ban until 9pm for food and drink high in fat, salt and sugar (HFSS), to combat childhood obesity
TV and TV advertising are not the cause of children being overweight or obese (O+O). Policy change in this area should inform and educate parents and young children, as they have in Leeds and Amsterdam
With 64% of the UK population being O+O, obesity is a complex societal issue requiring a multifaceted approach. The evidence from existing rules, and plummeting TV viewing amongst children, says that further restrictions on TV advertising will be ineffective in curbing the rise of obesity in the UK
After the most challenging period in its history since 2012, Facebook has been able to stabilise its fundamental metrics and announce a major product overhaul
Despite talk of a business model pivot, Facebook’s focus remains on advertising, whose growth will remain concentrated in developed markets
News publishers wishing to stay relevant on the upgraded product set need to target exclusive layers of social interaction, with groups particularly important
Out of Home (OOH) is bucking the trend in UK traditional media and continues to grow, driven by the digitisation of inventory as the paper estate recedes
Digital OOH now accounts for 50% of total OOH ad spend. Soon digitisation will slow, as much OOH inventory cannot be converted from posters to digital screens; sustained growth will require a different form of change
The industry is amidst structural shift – driven by consolidation and automation – which could be wholly positive, but a lack of cooperation between major players risks stifling innovation and the medium’s growth
The capacity boost with 5G will be more important than any speed or latency uplift. We estimate a 7-fold increase in mobile capacity in the UK and 13x+ for O2 and H3G
We view fixed mobile substitution products as quite niche although the number of mobile-only households is likely to creep up. mmWave would have the capacity to substitute for fixed but has many hurdles to overcome
Capacity-constraints have tempered competition of late and their removal risks an increase in intensity, especially as H3G views itself as sub-scale – good for policy makers but another challenge to add to the industry’s woes
Google’s Stadia promises the most credible game streaming service yet, but building a subscription bundle of top titles would require an all-out bet in the sector
Google is building its own game studios – to win over others it must overcome a troubled history in gaming, mitigating risks to developer business models and creative integrity
Games are much more technically demanding to stream than video, presenting an advantage to Google, Microsoft and Amazon – and a boost to telecoms network demand, welcomed by operators
Following record growth last quarter, the UK mobile market took a step down to just 0.9% growth in the quarter to December on the back of increasing pressure in the business market and the impact of out-of-bundle limits
2019 looks set to be a tough year for the sector with: a series of potentially painful regulatory hits; markedly lower price rises than last year; and early signs of a degree of creeping competitive intensity
We view 5G as a much-needed means of expanding capacity in the sector with upsides from M2M and IoT likely to remain relatively small
UK online advertising spend continued its double-digit growth in 2018, up 11% to reach nearly £13bn in annual spend or 58% of the total advertising market, but a no-deal consumer downturn could nearly stop growth this year
Google, Facebook, Amazon, professional services firms and the largest marketing cloud companies are the biggest winners, while content media, media agencies and independent advertising technology firms languish
Self-regulation has improved as pressure mounts on advertising technology firms, but interventions by both privacy and competition authorities are now inevitable
Governments and operators have come under increasing pressure to exclude Huawei’s 5G equipment from national networks, with justifications usually kept vague and wide-ranging rather than specific, and no evidence provided.
Given the role of Huawei’s 5G equipment in the network and the extent of existing testing and checking, realistic security risks that apply to Huawei and not to all other equipment suppliers are hard to conceive.
The risks of any ban are however very real; with Huawei one of only three global-scale telecoms equipment suppliers, and the preferred early choice for 5G radio equipment in the UK, removing this choice will massively increase costs and delay roll-outs of cutting-edge connectivity.