Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts from some of the talks, and you will find accompanying slides for many of the presentations here.
Videos of the presentations are available on the conference website.
Apple has provided more details on its smartwatch range, on sale from April, priced between $350-$17,000 to appeal to a wide range of would-be buyers and initially focusing on enhancing the iPhone through added convenience.
The Watch is likely to develop quickly in the next few years, and has the potential to become an indispensable tool for managing payments, health data and identity, as well as controlling other connected devices.
The company is laying the foundations for Watch to become a must-have device, but the case is still to be made and ultimately its success depends on a number of key groups and factors outside Apple’s control.
Consumer expenditure on recorded music continued its decline in 2014 by about 6% to $18 billion, as purchasing of download-to-own (DTO) albums and singles passed its peak in 2013, adding to the ongoing decline in total sales of CDs that started a decade ago Streaming is now the only growth story left for the industry, and it has a global footprint, being embraced by developed and emerging markets alike, unlike purchasing The US phenomenon of rapidly rising revenues from ad-supported audio streaming services such as Pandora and music video streaming on YouTube is quite unique as other markets currently lack the potential for online advertising
News has entered a new phase, defined by the disruptive forces of mobile, social media and video, effecting rapid changes in consumption and the underlying economics for news businesses: the level of change and innovation is rewiring the structure and financial models for news more quickly than many news providers are able to respond. While charging for news looks to be a successful route for some brands, we note that the scale of charging for the industry is substantially smaller than in print. Apart from this, three models are gathering traction: selling audience engagement; selling news services; and selling news to businesses. Each of these options involves very different strategies and opposing objectives which can only be pursued at the same time by those with the deepest pockets. Everyone else has to choose.
The Consumer Electronics Show in Las Vegas revealed the ‘next big thing’ for consumers to be products embodying the Internet of Things (IoT), controlled from the smartphone or the vehicle Wearables like fitness bracelets are already selling well in the UK, amongst the largest per capita markets for consumer electronics, and next up is the launch of Apple’s smartwatch Building out the smart home is the focus of the current wave of devices imbedded with sensors on show at CES 2015, with apps developed on platforms supplied by Samsung, Google and Apple
The iPhone 6 and 6 Plus drove Apple’s most extraordinary quarter ever, with the company’s position in the smartphone market improving on all fronts: explosive growth in China, rising market share in the US and a rising average sales price.
By contrast, iPad sales continued to decline in spite of the iPad Air 2’s release, suffering from cannibalisation by the phablet-sized 6 Plus and saturation in developed markets. Apple has a strategy to revive sales, which may bear fruit later in the year.
A slate of new products is coming this year, led in the spring by Apple Watch. The question is, will Watch be a significant new source of profit or just a way to protect the iPhone’s dominant position in the smartphone market.
Google has launched a dedicated ebooks store in the US, with support from 4,000 publishers, providing an ecommerce platform for independent book retailers
Google’s aim is not revenue from ebooks, though the market is attractive: we estimate ebooks will be 5% of the US books market in 2010 ($1bn) and could grow to perhaps half of all book sales within the next five years
Like Amazon and Apple, Google is using ebooks to support its broader strategy, driving search traffic and building an ecommerce platform. Revenue from ebooks is less important than supporting these objectives
National newspaper advertising revenues should be up 6-8% year-on-year in 2010, with ‘popular’ titles in particular attracting display ads from national retailer brands
Local and regional press advertising revenues will fall by about 6% year-on-year, mainly on the continued decline of recruitment classifieds
Publishers are exploring more efficient printing, new digital models, and staking a claim on e-commerce
European mobile revenue growth improved by 0.8ppts in Q3 to reach -0.3%, but all of this improvement and more was due to easing regulatory pressures, with underlying growth actually declining marginally
GDP growth continues to improve year-on-year, but in the current low confidence environment underlying mobile revenue growth is not (yet) responding. Smartphone sales are surging, but their net impact on revenue is hard to discern
Looking forward, the regulatory impact is likely to turn negative again for the next few quarters, so some underlying growth catch-up is required for revenue growth to stay at around zero
CPW’s European handset business had a steady quarter, with growth dipping slightly on the previous quarter but still in line with full year guidance. Smartphone sales are surging, and CPW is orientating its business towards them, but their impact is not unambiguously positive in Europe
The US handset business continued to enjoy strong growth, with this side of their business benefitting strongly from smartphone growth, and this outperformance led the company to increase its full year EBIT guidance
The UK ‘big box’ roll-out is continuing, but no sales figures or indications have been given, and the full year operating loss guidance has been increased, eating up some (but not all) of the outperformance from the US. There appears to still be much experimentation involved at this stage, and even more uncertainty about the eventual success or failure of this new business