Streaming profitability beckons, but owes much to the profitable services folded into companies’ DTC segments alongside the headline streamers.

There is a broader move towards bundling and price rises. The former bolsters subscriber additions and lifetime value but is ARPU-dilutive, while price rises will bump up both ARPU and churn.

2024 marks the first year with multiple players at scale in the ad space, as Prime Video entered the market. Other streamers with high CPMs and lower scale may be forced to re-examine their offerings.

Recent advances in 'Artificial Intelligence' have generated excitement, investment and improved valuations, on the plausible promise of greater efficiency in a range of areas, such as health and coding.

It is still not clear who will profit from this boom. Currently chip-maker NVIDIA is cleaning up, propelled by sales to model developers, also driving demand for cloud computing services.

Leverage in the AI value chain depends on differentiation and barriers to entry, which are high in the chips industry. AI services like chatbots have much lower barriers to entry, while deeper vertical integration of more stages of the value chain could shake things up.

Device makers regained their mojo at this year’s MWC, with phones a crucial route to generative AI becoming a daily habit. 

AI software has improved and proliferated, but limited differentiation leaves room for consolidation as a competitive funding crunch looms. 

Unanswered questions loom large, but won't dim AI's potential. 

Many telcos are surprisingly advanced in exploring GenAI opportunities, mainly in gleaning cost efficiencies in managing their complex systems, but it may also provide a revenue boost.

European telco CEOs made a heartfelt—if not entirely convincing—plea for regulatory/policy help via a ‘new deal’ to help support future investment, highlighting a genuine lack of price/investment balance in European telecoms.

The most convincing specific regulatory/policy solution is in-market consolidation, with other steps either less effective, or unlikely to happen, but a general shift in regulatory attitude could prove helpful in many small ways.

Vodafone’s Q3 results were slightly disappointing following the green shoots of Q2, with growth in Germany slipping back again, albeit some of it already flagged.

It is difficult to imagine the full year results event being a positive catalyst with the likelihood of a dividend cut, a recognition of the hard-currency reality of the financials, and a still challenging outlook for FY 2024/25.

Deal-making is a positive counter with a highly accretive deal still in the offing in Italy, and the prospect of execution in Spain and the UK. Various inorganic deals with 1&1, Microsoft and Accenture will also be helpful, although none of them as valuable as an improvement in the core operations.

The value of the domestic rights of major European leagues is falling due to the declining competitive intensity between broadcasters.

The Premier League’s new rights deal extends its lead, while Serie A faces a 10% fall in revenue next season and Ligue 1 struggles to get a flat fee.

Sky and DAZN have cemented their status as Europe’s top football broadcasters. Amazon has refocused to one game per week.

The UK’s ‘zombie’ economy—largely flat since March 2022—is due to the cost-of-living crisis weighing on households, with this exacerbated in 2023 by the rising cost of credit. Real private expenditure growth will be weakly positive in 2024 before strengthening in 2025 as headwinds recede

Our 2023 forecast of a nominal rise but real decline in display advertising was realised, with TV’s revenues falling while digital display rose. Advertiser spend online is justified by the channel’s size and growth, worth an estimated £406 billion in 2023

For 2024, much lower inflation and mildly positive real private expenditure growth points to 3-4% display advertising growth, with a stronger recovery anticipated in 2025

Service revenue growth was broadly flat this quarter as some unwinding of price increases was compensated by a pickup in roaming revenues.

Vodafone has made some progress on its turnaround plan: it has sold its ailing Spanish unit; is rumoured to be in talks about a deal in Italy; and its German business is (just) back to growth (for now).

We expect muted guidance for 2024 with lower prospective price increases for most, inflated cost bases, and continued consolidation uncertainty.

Cloud revenues are reflecting patterns of AI integration. As big tech companies jostle for advantage, Microsoft and Azure claim an early lead

Cloud profits remain crucial for wider tech businesses, affecting ability to innovate

Strategies to develop and market cloud-based AI tools are diverging, with uncertainty rife. The ecosystem will shift as the demands of consumers and regulators becomes clearer

Unable to match Netflix, financially-pressed Hollywood studios are cutting content output and reassessing the DTC model

Price rises are being forced through, however for challengers this is asking a lot from subs, who don’t see an improvement in product or usage

The corporate landscape is fluid—loss-making DTC platforms and revenue-plunging linear channels are candidates for M&A