Launched to the world in September 2017, TikTok is the first Chinese app to pose a serious threat to Western social media companies as it attracts hundreds of millions of Generation Z users around the globe

Privately-owned parent company Bytedance earned $7 billion in online advertising revenues in 2018 and is valued at $75 billion, placing it ahead of Uber as the world’s most valuable internet start-up, with an IPO likely this year

Bytedance’s goal of earning half its revenue outside China by 2022 is far from certain. In order to hit the target, TikTok will need to attain super scale with best-in-class revenue per user, an unlikely combination

Consumers have more shopping options than ever, forcing businesses to expand how and when they offer services. Online giants Amazon and Alibaba are adding physical retail to extend their routes to market

Omnichannel provides consumers an enhanced, seamless brand experience from research and discovery to purchase, delivery and after-sales, and allows businesses to react to changing consumer preferences more flexibly

Next is an omnichannel success story, introducing 48-hour home delivery in 1988 and online sales in 1999. Its market-leading fashion ecommerce business offers lessons on the future of retail

The combination of 5G, AI, IoT and big data were evangelised at MWC as generating massive scope for the transformation of multiple industries. 

That much is probably true, but it is the tech and consultancy companies who will likely receive the benefits, with connectivity revenue likely to be modest.

For the operators, 5G brings more capacity much needed for hungry smartphone users, and perhaps the opportunity to transform themselves into a leaner operating model.
 

Across the EU4, pay-TV is proving resilient in the face of fast growing Netflix (with Amazon trailing), confirming the catalysts of cord-cutting in the US are not present on this side of the Atlantic. Domestic SVOD has little traction so far.

France's pay-TV market seems likely to see consolidation. Meanwhile, Germany's OTT sector is ebullient, with incumbents bringing an array of new or enhanced offers to market.

Italy has been left with a sole major pay-TV platform—Sky—following Mediaset's withdrawal, while Spain's providers, by and large, are enjoying continued growth in subscriptions driven by converged bundles and discounts.

With the UK perhaps Netflix’s most valuable market outside the US—home to a stellar production sector—the streaming service is escalating its foray into local production, opening a content hub in London and moving from co-productions to direct commissions

As UK content completely dominates UK video viewing outside of the SVODs, to expand subscription reach Netflix is endeavouring to become an alternative to the PSBs’ entertainment output; this local spend is efficient given the universality and worldwide appetite for British content

With a growing proportion of local content expenditure now coming from Netflix and other SVODs, there are ramifications for both broadcasters and producers—loss of viewing, potential market pressure, increased competition for premium content and hesitancy around their own SVOD plans—along with implications for the cultural landscape

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Amazon’s recent deals with Apple in TV, music and device sales mark a turning point after a decade of frosty relations

The context for this involves shifting priorities at both firms, growing pressure on Apple’s iPhone business, and rivals in common — first and foremost Google, but also the likes of Netflix and Spotify

The uneasy alliance helps both companies consolidate their strengths in the platform competition over media and the connected home — but trouble already brews

2014 has been a good year for total advertising, which we forecast to grow by 5.5% across the year; display advertising spend is also forecast to grow by over 6% year-on-year. This is largely thanks to a positive economic backdrop, where we have seen a significant rise in consumer expenditure over the last two years

Online advertising spend has been the biggest recipient of growing ad spend, with 20+% growth last year, this year and next. This has mostly been to the detriment of print revenues, where online classified search solutions, amongst other factors like declining circulation, have disrupted print marketplaces

Video has been the largest growth area in internet advertising as online video consumption increases. Up to now online spend has largely been accretive to TV budgets but we are starting to see some advertisers switch to online video spend. However we do not expect TV to suffer in the same way as press

ITV and Channel 4 have asked the regulatory authorities to review the case for legislation that would for the first time allow the commercial PSBs to charge carriage fees for their main free-to-air channels on the pay-TV platforms

To this end, ITV has presented a detailed analysis showing the great contribution to the US creative economy due to the introduction of Retransmission Consent Compensation for free-to-air broadcasters in the US, but without setting this against the very different market structure in the UK, where the commercial PSBs enjoy significant privileges

Any change to UK rules will require primary legislation and is not expected until after the May 2015 General Election. Should action be taken, the choice appears to lie between regulation (adding “must carry” rules) and deregulation of commercial PSB privileges, where the end result might not be what the PSBs wished

Apple has fulfilled its promise to roll out innovative new products this year, launching Apple Watch into the nascent wearables market and Apple Pay, a new mobile payments service, as well as moving the iPhone into ‘phablet’ territory.

The larger-screened 6 and 6 Plus should revive growth in iPhone sales and ASP, as well as providing another variable to compete in the mid-tier handset segment; Apple Pay further enhances Apple’s lock on its customer base.

Apple Watch’s likely impact is harder to discern; to date sales of smartwatches have been lacklustre but although Apple’s offering is the most commercially viable yet, it still feels like a solution in need of a problem.

The commercial non-PSB sector saw strong growth in share of total TV viewing of close to 40% as the multichannel TV homes universe doubled in the 10 years between the launch of Freeview in October 2002 and completion of digital switchover in October 2012, and even higher 50% growth in SOCI (share of commercial impact) thanks to the higher commercial airtime quotas of the non-main PSB channels

Even during the growth years, non-PSB channels that were present in 2003 felt a squeeze on viewing share and suffered losses as result of numerous channel launches that added to the long tail (Squeeze 1), and strong growth in the PSB families (Squeeze 2), which saw the total PSB share among the Top 25 channels in multichannel TV homes rise from less than 80% to over 90% between January 2003 and January 2014

Today, both the PSB and non- PSB commercial channel groups face the challenge of internet connectivity and increasing population of portable screens (Squeeze 3), and they are experiencing similar rates of decline. Yet, even if overall trends look the same, non-PSB viewing trends show significant variation by channel group and genre, to be explored further in Part 2