Video sharing platforms, like YouTube, Facebook Watch and Twitch, are vying to attract creators with monetisation options such as branded content and user payments.
Advertising income, already limited for many small and medium-sized creators, has been undermined by YouTube’s response to brand safety concerns.
The new tools come with their own obstacles, but are necessary to keep platforms attractive to video creators.
Sky made a surprisingly weak start to 2019, with revenue growth decelerating to 1.9% (the first time below 4% since the European businesses merged in 2015), due to weaker ARPU trends.
However, Sky expects improvement to follow, blaming one-off factors in the quarter. The ARPU weakness drove EBITDA down 11.3%, but this should bounce back across the rest of 2019 as football rights costs turn from a drag to a positive.
Comcast highlighted collaborations with Sky across tech, advertising, content distribution and even news, stating it is on track to achieve the anticipated $500 million in annual synergies over the next couple of years.
Sky’s revenue growth under Comcast appears to have accelerated since it last reported as an independent company, largely driven by sports rights expansion in Italy, which also drove bumper subscriber growth in Q3 2018
Sky UK likely enjoyed a steadier performance, helped by accelerating high speed adoption, a price rise in April, increased international sales, and improving premium channel adoption on third-party platforms
Comcast expects continued acceleration into 2019, with profitability taking a hit from increased sports rights in Italy in H1, but this is more than compensated for by reduced English Premier League rights costs in H2
Sky maintained strong revenue growth of 5% in 2017/18, with EBITDA and operating profit both bouncing back into strong positive territory after the UK Premier League rights hit of 2016/17
The UK grew revenue well and profits better; Italy performed well and should improve much further given the retreat of its principal competitor; Germany is more challenged, but extra content investment may aid sustained growth
Sky is proving adept at managing content costs and revenue in a changing environment, with investment, cost control and monetisation all being put to effective use as the content type demands it
Yet another annual hype cycle in 2018 can’t hide a tepid consumer appetite for all VR platforms and heavy weather for the industry as a whole
The launch of Oculus GO, a standalone device at an attractive price, is a milestone for VR; nevertheless, even Facebook remains worried about reach and the state of the industry
Mobile AR is still a strategic focus for Google and Apple, producing diverse applications instead of just games, but new headsets from Microsoft and Magic Leap which promise advanced MR experiences have no launch dates
Italy’s top football league awarded Sky the broadcasting rights to seven games per week from August 2018 until May 2021 for €780 million per year, up €208 million. UK-based Perform will carry three games for €193 million. Mediaset exits the market, freeing Sky from price competition
Besides Serie A, Sky added Mediaset’s Hollywood series and films to its content line up in May and will include the Champions League from August. We expect costs to rise by up to €500 million per year, which could be recouped by cuts in content and by recruiting Mediaset subscribers, notably on Sky’s new DTT feed
The best model for Perform would be to wholesale its new DAZN service to Sky, but even if a deal is found we doubt it could break even within the rights cycle
Sky H1 results were very solid, maintaining 5% revenue growth and 10% EBITDA growth, with Sky continuing to support a widening product portfolio and more expensive core products with strong cost control and execution
Subscriber volume growth was a little weak at the margin, but this will be helped by all-IP products expanding the economically addressable base in new, and existing, markets
There remain questions on content, with the outlook for premium football rights uncertain in the UK and Italy, and investment in Originals questionable given a mixed track record, but certainly with upside
Even though Facebook is not a producer of news, 6.5 million UK internet users claim to mainly source their news from the platform. Posts and shares by friends in the user's network, in the context of Facebook's algorithm, determine the order of stories in the personalised News Feed, removing the control of the news agenda that publishers have for their websites
Premium publishers operating a paywall (The Times, The Financial Times) have a lower key approach to Facebook than publishers generating advertising revenue from referral traffic to their websites or from on-platform consumption of Instant Articles. The latter will seek to stimulate social media engagement, optimising stories through attention-grabbing headlines, and installing Facebook’s share and like buttons on their websites
Case studies of the news stories that were prominent on Facebook (measured by likes, comments and shares) in the periods leading up to the Brexit Referendum and General Election 2017 votes respectively demonstrate that newspaper brands (the Express for Brexit, and The Guardian for the General Election) achieved the highest reach on Facebook during these periods, despite being ranked below other news brands (BBC in particular) in terms of traffic to their websites
The Federal Communications Commission’s Privacy Order (FCC) was overturned by the Senate, clearing the way for ISPs to ramp up consumer data-driven advertising revenue.
While Google and Facebook dominate digital advertising in the US as in other markets, the US is alone in removing regulatory barriers to ISPs taking a piece of the pie.
US ISPs now have a self-regulatory regime for consumer rights on transparency, security and data breaches; but in the UK and EU, privacy advocates prefer enforceable rights.
Facebook content shares suggest that misinformation had broad reach during both US and UK political campaigns, but outright fake news was rare, particularly in the UK
Mis- and disinformation by both established and new publishers was distributed on Facebook, but monetisation took place predominantly off-site, and content was distributed by a wide range of search and social platforms
Facebook has acted to limit the reach of disinformation, but can’t and shouldn’t be expected to do so alone as digital news distribution touches on complex questions including information and democracy, media literacy and heterogeneous cultural and social norms