The games industry, with the potential to become the world’s largest media and entertainment sector by revenue, is undergoing profound transformation.
The consolidation of major developers is a response to a revenue model pivoting toward subscription, with direct consequences for those already in the subscription space: film, TV and music.
A technology-led creative medium, with an audience approaching three billion gamers, is seeing its franchises become more valuable and useful than ever.
At this year’s Mobile World Congress, new hardware was stuck in beta, but glasses-free 3D screens impressed.
The metaverse confronted its identity crisis in a deflated hype cycle: blockchain and NFTs withdrew to the shadows, leaving the focus on enterprise and industrial applications.
AI: while aware of the (numerous) issues, discussions occasionally skated over issues of effectiveness, data inputs, the role of humans, and conditions for adoption.
Microsoft’s planned acquisition of Activision Blizzard is in trouble. US, UK, and European regulators may make the deal impossible for Microsoft—and a disaster for Activision and the wider industry.
Sony’s late improvement in PlayStation 5 sales is only just enough to reach its target numbers for the year. It needs a more dynamic approach to a rapidly changing industry, and a less dogmatic message to consumers and regulators.
Netflix Games is more than a trial—it’s on track to become a major games platform.
Telcos are pressing the EU to force big tech to make a ‘fair contribution’ to their network costs, although this has drawn opposition from telecoms regulators, who rightly fear risks to the wider ecosystem
There are valid concerns to address however, with content providers not currently incentivised to deliver traffic efficiently, and telcos constrained by net neutrality rules from doing anything about it, resulting in unnecessary costs and service degradation
However, there may be better ways to address these, through reforming the implementation of existing rules to encourage more efficient content delivery, and allowing the telcos to provide enhanced delivery routes of their own, with Ofcom’s approach in the UK a step in this direction, but perhaps not a step far enough
European mobile revenue growth was flat again this quarter as a larger boost from annualising the roaming drag was outweighed by B2B weakness, a waning mobility boost and the unwind of pandemic upsides.
Italy saw the biggest improvement in its underlying trend as Iliad struggled to regain momentum, while competitive tension remains elevated in Spain and France.
Q4 looks mixed before 2022 kicks off with some market-specific positives for the UK, but the other European countries will finally face the impact of end-of-contract notifications.
Market revenue growth remained positive in Q3 despite much of the lockdown bounceback dropping out, and is at a significantly higher level than pre-pandemic.
The backbook pricing pressure that has plagued the operators over the last 18 months appears to be finally starting to drop away, allowing strong demand and firm pricing to feed through.
The prospects for next year are also very positive, with firm price increases expected from April, ultrafast upgrades growing in significance, and continued annualisation of backbook issues.
VMO2’s half-year results were something of a mixed bag with some decent revenue momentum but a big hit to EBITDA as COVID cost-savings unwound and company full year guidance suggests a further deterioration in Q4.
Volt, VMO2’s convergence product, is well-conceived and executed. With a following wind it should avoid the pitfall of revenue dilution whilst potentially offering some upsides.
The company remains in strategic limbo awaiting an outcome on its wholesale discussions with Sky. This will determine not just fibre expansion plans but also branding and co-marketing of its central products.
After China updated its Anti-Monopoly Law to cover platform companies, the Government is bringing to heel privately owned ‘national champions’, including via antitrust measures in their home market—the key source of their astronomical cash flow—and through interference in their expansion outside China
China lacks any tradition of anti-monopoly activity, given its gradual shift to the market from state-owned enterprises, it offers an example of theory in practice for antitrust reformers targeting platforms in the West
The global implications are huge: up to $2 trillion of Wall Street shares are exposed as China tightens controls on foreign IPOs. Regulators could also use enhanced antitrust powers to disrupt global dealmaking for economic leverage
Market revenue growth bounced back to 4% in Q2, the first positive growth for the sector since 2019 .
Most of the improvement was however temporary sports channel bounceback, with underlying growth still negative.
Prospects are nonetheless healthy, with price increases now regular, backbook pressure annualising out, and ultrafast boosts growing.
VMO2’s inaugural results reinforced the company’s focus on profitability with EBITDA growth of 6% and record margins. Flat revenues year-on-year benefited from the annualisation of the COVID-19 hit but incorporated little by way of rebound.
Much remains to be seen in terms of strategy but indications thus far are reassuring with B2B a clear focus for revenue growth, and the benefits of direct distribution feeding through to profitability.
The company’s decision to build an overlay full fibre network is a bold, but smart, move—allaying justified obsolescence fears about its network, enhancing strategic flexibility, and reducing its cost base.