Alphabet’s growth slowed in Q1, but search remains the premier advertising product: protected against privacy changes, and poised to grow on a return to travel.
Investors focused on YouTube’s disappointing growth. Its exposure to brand advertising has slowed it relative to search, and it now has to compete with an increasingly formidable TikTok. User subscriptions could be a hidden strength.
The US remains the core of Alphabet’s business as uncertainty and energy price jumps hit Europe.
TikTok has reached a billion users worldwide just four years after its global launch, much quicker than social media rivals, though its ban in India is a drag on growth.
TikTok’s popularity with under-25s has contributed to a hollowing-out of Meta’s active userbase. During the pandemic, TikTok also expanded its reach among older demographics, cementing its position within the mainstream and posing a further threat to Meta.
TikTok could earn twice as much revenue as Snap in 2022, making it the first app to break out of the mid-league in years, with a huge runway for growth backed up by ByteDance’s remarkable success in China.
Sky’s performance across 2021 significantly improved, driven in Q4 by a nice c.5% growth rate in UK consumer revenues and the advertising rebound, but effects of the pandemic are still being felt with EBITDA down 30% on 2019.
The decline in Group revenue accelerated in Q4 due to the severe shock to the Italian operation from its loss of most premium football coverage, although we see upsides in a possible rights reshuffle.
In 2022, Sky can leverage growth vectors including bigger content bundles, Glass, advertising innovations and broadband. Consolidating SVOD and telecoms markets may be more favourable to price increases.
Alphabet's stunning growth reflects a shift online that has outlasted pandemic restrictions. Google search is at the heart of online commercial activity
YouTube's slower growth is not yet cause for concern: it is still the biggest website in the world, with growth potential through subscriptions and transactable ads, as well as more brand spend
Alphabet might struggle to balance privacy concerns in the context of the online advertising ecosystem. The future of personalisation in ads is uncertain as Alphabet cancels one of its cookie-replacement technologies
US entertainment groups have not been disrupted by the rise of digital media. Long running franchises drive growth across diverse sectors, starting with pay-TV and SVOD. US television advertising is rising in line with GDP, while the online video ad market is flourishing, with much appearing alongside the majors' scripted content
Studios' cable channels are their most profitable assets, but M&As with distribution platforms, including Comcast's aquisition of NBC Universal, have usually failed to deliver synergies
The Donald Trump presidency could leverage hostile public opinion towards mergers to undermine the AT&T bid for Time Warner; but it could also stimulate M&As if it granted tech companies a tax break to repatriate profits. A more protectionist administration could also bring about a less benevolent attitude towards majors' foreign operations
Whether the US has reached “Peak TV” —the apogeic volume of original scripted series—is debatable, but the mass of content being produced is unparalleled
As television continues its transition from a disposable medium to a permanent one, and an increasing number of outlets are creating original, scripted programming to keep up or differentiate, does this American explosion have ramifications for the UK consumer or broadcaster?
Simply put, the UK’s more concentrated television landscape limits exposure. And, counter-intuitively, an unsustainable focus on scripted drama could play into the hands of the traditional broadcasters, whose future strength may lie in the diversity of their offering
Video content is crudely defined. If something is not very short (<10 minutes) then it tends to be considered long-form. But there is a middle ground - one which displays a distinctive combination of characteristics in terms of production, broadcasting and viewing
Mid-form video (between 10 and 20 minutes) has the ability to carry the narrative arcs normally associated with long-form programming, whilst also retaining the snackable and shareable attributes of short-form
The footprint of mid-form is, so far, small. However, it is growing, as its unique qualities, such as excellent ad completion, become more readily recognised
Music publishing revenues are trending up in a broad sustainable manner across the US, Europe and Japan, underpinned by longstanding music rights regimes
Purchasing is down and streaming taking off, driving a mechanical to performance transition, with direct licensing of Anglo-American repertoire in Europe as in the US
Public performance revenues collected by PROs are also rising as live music grows, general business conditions improve, while TV audiences remain resilient
Cinema, TV and VOD services share in the same ratings regime in the UK, giving parents confidence they can discern content unsuitable for their children.
Risks to children of being exposed to unsuitable content and advertising multiply on the 'open' internet.
Parental controls supplied by ISPs are key to filtering content and sites, although a unified approach is better
Amazon’s newly launched open video hosting service, Video Direct, will appeal to creators of ‘professional’ videos by offering them a new platform and monetisation options
Amazon’s attractiveness to video creators resides mainly in the prospect of earning a portion of subscription fees from millions of Prime members
While Video Direct might not become a huge business for creators, this move cements Amazon as a media platform and risks hurting YouTube