Service revenue growth dropped further to -1.7% this quarter as pricing remains under pressure and in-contract price increases no longer benefit
Competition is heating up in Germany and France, and Digi is taking an aggressive stance as it enters the Portuguese and Belgian markets
While there is increasing awareness that investment levels in Europe are compromised by the current market structure, support for in-market consolidation remains lukewarm at best at the EU level
The proposal from DCMS to expand the pre-digital “public interest” regime that requires clearance for changes in the equity stakes in print newspapers to online news publishers lacks a firm rationale in 2024.
A plethora of online sources dilute the influence of news brands and their proprietors over British people’s political views, in particular the platforms (X, YouTube, TikTok and Facebook) hosting self-publishing influencers, politicians and political advertising.
The UK's expanded future regime, if enacted, will further chill the appetite of investors for stakes in commercial media, reduce their value and ability to raise capital, and stifle beneficial consolidation.
Broadcasters have made considerable progress in becoming platform agnostic over the past three years, delivering innovative ad propositions offering greater targeting, flexibility and measurement.
They would welcome the opportunity to work with advertisers to explain the complexity involved in delivering linear and digital campaigns.
Broadcasters believe that although TV advertising is transitioning to digital, legacy share deals and reliance on pricing relative to ITV1’s station average price (SAP) continue to hold the market back. Potential amendments to CRR may allow for a smoother digital transition, benefitting the entire ecosystem.
Under financial stress, most streaming platforms are increasingly focusing on third-party distribution. Thanks to bundling, top streamers like Netflix can increase the lifetime value of subscribers, while smaller streamers widen their reach.
Bundles of streamers may have some potential in the US, but in Europe—with Netflix not interested—they do not have the necessary scale.
This trend towards bundling favours incumbent pay-TV aggregators like Sky and Canal+, but in the longer run they face competition from tech video marketplaces.
Disney believes it has turned a corner, laying out positive forecasts for the next two years, featuring annual, double-digit EPS growth. Streaming is now reliably profitable, although its low and generally inert ARPU will inevitably have to be stoked by more price rises
In the UK, Disney+ continues to trail Netflix in a number of core metrics—reach, engagement and habituality—but Rivals signals the potential of a positive trajectory
Similarly, although Disney's relatively patchy theatrical release schedule has had an effect on Disney+, a strong next six months should flow through to service growth
The Creative Industries (CI) are part of the UK’s emerging Industrial Strategy to power up output growth instead of relying mainly on consumer spend. Film & TV production is a prime example of a longstanding and successful industrial strategy that could be widely emulated.
Media’s contribution to economic growth is mainly in the form of a broad regional spread of skilled jobs created by a mixed ecosystem of commercial and not-for-profit entities, such as the BBC PSB Group and Channel 4, alongside 25,000 charities devoted to culture and recreation.
Media adds more than economic value to the UK by uniquely creating (unmeasurable) societal values through cultural products and services, anchoring a common language and identity at home, and conveying a vibrant and inspiring Britain to the world.
UK football rights values have pulled further away from European peers in a stagnant market, as telcos have withdrawn and tech companies remain selective bidders.
Sky and Canal+ have tied down key contracts until towards the end of the decade, while DAZN now has domestic rights for four of the top five European football leagues.
Tech players want live sport, but have distinctive demands and without new monetisation models they will not challenge pay-TV incumbents.
As Netflix transitions towards a reporting cadence that omits quarterly subscriber numbers, the focus is on revenue (+15% YoY, to $9.8 billion) and margin (+8ppts YoY, to 30%), which remain buoyant. The company has guided that 2025 revenues will be $43 to $44 billion (+$4 billion YoY), mostly due to subscriber growth
Netflix's advertising-supported tier is dragging its ARPU—however, given its important future growth role, we would expect it to start influencing the direction of the streamer's content slate
Despite its expansion into new genres, Netflix's UK viewing has further narrowed around drama and films: however, live sport, British formats and soaps could move the needle in the future
UK news publishers are experimenting with generative AI to realise newsroom efficiencies. Different businesses see a different balance of risk and reward: some eager locals are already using it for newsgathering and content creation, while quality nationals hold back from reader-facing uses.
Publishers must protect the integrity of their content. Beyond hallucinations, overuse of generative AI carries the longer-term commercial and reputational risk of losing what makes a news product distinctive.
Far less certain is the role of generative AI in delivering the holy grail of higher revenues. New product offerings could be more of an opportunity for businesses that rely on subscribers than those that are ad-supported.
2023 was a challenge for Channel 4: with the advertising market failing to recover after a difficult start, the unpredictability led to an unexpected YoY drop in content expenditure
In 2024, advertising revenue is expected to be flat, which provides a more stable planning base. Recent volatility has tested the broadcaster’s flexibility and proactiveness, above its competitors who are more insulated
To that end, Channel 4’s process of diversifying its business—the difficulties of 2023 show that it needs to be supported in these endeavours if the sector wants a consistent return of benefits