Journalism is on the precipice with more than £1 billion likely to fall off the industry’s topline. Several years of projected structural revenue decline in advertising and circulation have occurred in just the past few weeks of the coronavirus pandemic, with no letup in sight.

The UK’s rich heritage of independent journalism is at risk, with responses by Government and ‘big tech’ multinationals welcomed but ultimately inadequate. We make two further recommendations for engagement in this report.

Journalism enterprises from the small, local and specialist outfits through to national household brands will either fail or remain on a path to future failure.

COVID-19 has sent online news surging, with publishers experiencing massive traffic uplift, as trusted news sources become increasingly important.

But the industry is still heavily reliant on print revenues, and we are seeing supply chains come under extreme pressure as core readers self-isolate and retail giants close or de-prioritise news media. Advertising—including categories like retail and travel—has collapsed.

In face of existential threats to the sector, we have written to DCMS to mobilise Government funding to sustain news provision and journalism.

European mobile service revenue growth improved by 1ppt to -1.2% primarily as a consequence of diminished competitive intensity in France. Trends elsewhere were largely flat.

The mobile sector is playing an important role in tackling COVID-19 and is likely to be relatively resilient in the short term with a broadly neutral financial impact. Longer term it will be exposed to the fortunes of the economy.

There are reasons to believe that the improvement in trends evidenced in the last quarter may continue as churn reduction takes the heat out of some markets, cuts to intra-EU calls annualises out and for most countries, end-of-contract notifications will only begin to impact in 2021.

 

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.

Subscription game services will finally allow platform owners and developers to deliver truly accessible gaming experiences for all, across devices, at a lower entry price point, and curated to ensure consumer safety—both in terms of cost transparency and content types.

Consumer comfort with subscriptions should be embraced by the games industry and has already started in mobile. Apple’s Arcade subscription is the test case, providing focused all you can eat games that minimise exposure to violent gameplay, and the ‘free to play’ wild west.

Core gamers remain the most vital and profitable games customer segment, but they have been overserved and are an obstacle to broadening the reach of games. Now is the time to move beyond this group, to restructure, expand, and normalise the games market in the next decade.

France Télécom’s Orange TV premium strategy presents an interesting example of diversification into low cost ‘light’ pay-TV offers by an incumbent telecoms operator. Orange Sport and Orange Cinéma Séries are offered exclusively to Orange's 2.55 million TV subscribers, and five quarters after launch, adoption is 20%. This report draws several lessons on this type of venture for other incumbent operators

Steep declines in CD sales in major recorded music markets continued in 2009 as we had forecast last year (Recorded Music and Music Publishing [2008-39])

Sales of recorded music continue to be decimated by physical and online piracy, plus the disintermediation of the album purchase by the digital purchase of ‘cherry-picked’ tracks

A further knock-on effect on CD sales is the reduction in retailers’ shelf space devoted to music, including as a result of the bankruptcies of major chains (Circuit City, Woolworths and Zavvi) – what we have called the ‘perfect storm’ for the CD

The iPhone has inspired all the major Smartphone makers to launch touchscreen models, and dramatically improve the usability of their interfaces. The iPhone itself remains the most easily usable touchscreen handset in our view, although at the cost of speed of use and adaptability

Unfortunately, the characteristics that make these handsets easier to surf the internet with – large screens and/or QWERTY keyboards – are just the characteristics that are unlikely to trickle down into mass market handset models, meaning that the impact on mobile data usage is limited

We continue to believe that web browsing is unlikely to be popular on mass market handsets for the foreseeable future, but usage of web services can be popularised by more of a widget approach, which the cheap but smart INQ1 handset demonstrates well

Major record labels will allow iTunes to sell all its music stripped of digital rights management (DRM), removing a barrier to digital music buying, while iTunes will introduce in April the tiered pricing the industry wants

We expect no real bounce in demand, however, as Apple’s DRM was not a restriction for iTunes customers as most owned iPods, the dominant music player in a market which is almost fully matured – we expect few iPod customers to pay to upgrade their libraries to DRM-free

News of peace breaking out between iTunes and the recorded music industry was overshadowed by reports of the continued steep decline in CD volumes sold in the US market, down almost by one fifth in 2008 from 2007, with digital increases again failing to offset the decline

Ending a simmering commercial dispute, Vivendi’s Canal+ has agreed to distribute its packages to France Télécom’s Orange TV satellite customers, allowing Orange to relaunch its DTH platform (targeting 4 million customers off the DSL TV footprint) after its dismal ‘do-it-alone’ first six months

Canal+ recruitments will benefit from the resumption of active marketing for its packages over Orange TV platforms, after a poor year for subscriber growth

Canal+ catch-up TV will now be available to all Orange Canal+ DSL TV subscribers, as it is to those on Free, where it is very popular, plus Orange satellite subscribers, thus giving Orange back the leadership position on IPTV in France