In response to COVID-19 and the associated lockdown and economic crash, advertisers have slashed budgets. Online budgets are not immune.
This has clarified features of the online ad market: it is demand-driven, relies heavily on SMEs and startups, and is built on direct response campaigns.
We expect online advertising to outperform other media, and for platforms to further gain share. But with a very few exceptions, this health and economic disaster is good for nobody.
2020 promises a year of transition for the games industry: eSports and games broadcasting are competing with traditional programming; game streaming services are becoming meaningful platform competition; and new consoles are on the way.
While most in the studio and TV industries continue to struggle with the games market—neither understanding (or seeing) a strategic fit, nor showing a willingness to invest—expect explosive growth to power the industry for the next decade and transform all entertainment services, not just games.
The ‘free-to-play’ games sector requires oversight and regulation to protect children and the vulnerable; expect regulatory turbulence in the UK, Europe and China.
Despite two decades of online disruption, the UK remains reliant on traditional platforms and brands across the media sector more so for older cohorts, but also for younger generations
13% of adults still do not use the internet and, in reality, an online only media ecosystem remains a distant prospect
Traditional providers, particularly within TV, radio and news, look set to endure for the long term , aided by the trajectory of the UK’s ageing population
Digital advertising in the UK has been a phenomenal success story, but a concentrated one, such that many online media companies have not found a sustainable model
User payments are growing, but are currently focused on large, expensive bundles: Spotify, Netflix, the New York Times. This implements a hard division between free and paid and limits the potential audience
Micropayments and microsubscriptions are alternative models which content owners in certain media can use to address more types of demand. Multiple obstacles remain but for many companies the need to experiment has become critical
Google has beaten Facebook in mobile revenue growth, and competes successfully in retail search with Amazon
Intelligent user interfaces based on machine learning have become a core competitive strength, with social and messaging the main remaining weak points
Rising political pressure due to Google’s growing scale and influence is now a bigger concern than commercial risk, as the threat of regulatory intervention limits strategic options in partnerships, M&A and integration
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.
Voice, and the smart virtual assistants that power voice interfaces, will be a key transformative force over the next five years
Any business providing content or services via digital means is potentially affected, as these virtual assistants promise a single front end for all digital services, representing an extraordinary concentration of control over discovery, delivery and data
Media businesses will clearly be affected. But there is an opportunity for them right now to influence the assistant providers to their advantage, a window that will not stay open forever
The successful launch of the Nintendo Switch creates a new console model, and demonstrates the staying power and long term value of great franchises
Microsoft reveals the specification for Scorpio, but it won’t be enough to catch up to Sony. New franchises, and probably new leadership, will be the key to stopping Xbox sliding into irrelevance outside North America
Sony’s PlayStation 4 now exceeds 60m units worldwide, allowing Sony more freedom to publish a wide range of challenging creative console games, while VR games continue to gain momentum
Fashion underpins the growth of ecommerce; online took a 14% share of all fashion retail in the UK last year and is set to rise further, challenging the economics of physical retail
Mobile is a key driver, it is changing research and shopping habits, and in turn affecting supplier product cycles, merchandising and marketing strategies
Social media has disrupted the traditional shopping funnel, changing how trends and styles proliferate and shifting the sites of authority and influence in a £66 billion sector
Amazon’s marketing services bring in a growing stream of direct, high-margin revenue, but their main role is still in supporting vendor partnerships
Amazon uses customer profile data to profit from its own media and that of others, illustrating the value of a direct customer relationship in online advertising
In the future, Amazon’s moves into video content and voice interfaces are likely to significantly expand ad inventory, but maintaining the trust of shoppers is not straightforward