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.

FAST services that include digital linear channels (FAST channels) appear to be experiencing solid growth in the US. In the UK, this success has been used to highlight a potential mechanism to diversify away from broadcast linear and SVOD

However, the growth potential of these services on this side of the Atlantic contends with a very different video market than the US—the free output of the PSBs remains prolific and of high quality, while prominence legislation is likely to tougher

Furthermore, overall viewing of long-form video content is declining. Any new FAST services will be fighting for a declining amount of screen time with poor content slates and little name recognition—however, growing demand for US content is an advantage

The pandemic years boosted many businesses selling services on subscription in the UK: work-from-home gave people more time and money to widen the services they enjoyed in the home, such as gaming, entertainment and music, also boosting engagement with trusted news

The cost-of-living crisis dented the number of subscribers to OTT SVOD and news services in Q2 2022. Broadband and mobile are must-have; bundles of services (e.g. Sky’s pay-TV and broadband or mobile) are more resilient; yearly and multi-year contracts prevent churn relative to monthly contracts; and services that cater to passions (e.g. football) are always need-to-have

Subscription (or supporter) media and news services reaped the demand for trusted news through the pandemic, but now face a tough challenge to their toplines from the economic downturn—and also to transition to a sustainable business model for media audiences, while advertisers are also feeling the heat

Mobile service revenue growth rose to its highest level in over ten years (+4.5%) as a result of the operators’ higher-than-inflation price rises.

BT/EE fared best with broadly-applied, sizeable increases and robust churn while H3G’s more modest increases and later timing led to just a minor pickup in its service revenue growth—in spite of continued strong performance on the subscriber side.

There are some early signs of an increase in consumer bargain-hunting and some payment challenges, with B2B robust for now but with an increasingly rocky outlook.

Market revenue growth continued to accelerate in Q2 to reach 3%, but broadband growth worryingly dipped as the lockdown boost waned.

Differing pricing dynamics (among other factors) led to very different outcomes for the main players, with BT’s growth surging to 7% while VMO2’s revenue stayed in decline.

Underlying trends of weakening broadband growth, keener pricing and customer bargain seeking point to slower growth ahead … until the next price increase.

BT Group’s revenue growth surged in Q1 to 1%, the first time it has been positive in five years, with a stronger than expected boost from the April price rises partially offset by the Virgin Mobile MVNO loss.

EBITDA growth, however, actually dipped to 2%, with little operating leverage due to cost pressures, although the company is still very confident in its full year EBITDA guidance (which implies 4% growth).

BT is far from immune to macroeconomic pressures, with pressure on costs, corporate revenue and signs of a sharp dip in broadband market growth, but it is well placed to deal with them given strong growth at Consumer and Openreach.

UK altnet full fibre rollouts are accelerating, with an aggregate build pace close to that of Openreach, but customer acquisition is not growing at the same pace, and overbuild in the most attractive areas is becoming a significant issue.

Altnet business models remain challenging and are getting worse as Openreach builds out, and (although there are some notable exceptions) most will need to rapidly achieve scale and turn around their performance to survive.

Consolidation is very likely, along with business failures, and while some market share loss for Openreach looks likely as serious scale players emerge, the downside is limited, and even more so for retail ISPs.

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.

A forthcoming UK regime on the relationship between publishers and platforms, certain to include Google and Facebook, will seek to replicate the payments achieved in Australia. However, the principles, design and precise process are still to be revealed by the Government

Facebook’s News Tab and Google’s News Showcase license content from publishers (including paywalled content) and direct traffic to their sites, although industry tensions remain high

Google Search is the elephant in the room because, while Facebook is a service to its users, search is a utility: making news more important to its offering, and explaining why Google’s commitment to the news industry runs deeper—and for the long term