Amazon Channels’ aggregation of third-party streaming services enhances the consumer appeal of its wider video proposition, provides incremental revenues and increases the stickiness of the Prime shopping service

Content partners range from major players (e.g. Discovery and ITV) to the more niche (e.g. MUBI and Tastemade), who all benefit from a ready-made platform, billing relationships and a receptive subscriber base. But the revenue shares, data costs and lack of direct customer relationships remain too high a price for some

Two and a half years on from its UK launch, opportunities for live, ad-supported and bundled content are diversifying the platform, but Amazon must prioritise discovery within Prime Video to continue to flourish

Market revenue growth fell in Q3 to below 1%, and may drop below zero next quarter as existing customer pricing comes under more pressure

New customer pricing is however rising, and average pricing should rise much further as ultrafast increases in availability and popularity 

Political enthusiasm for full fibre should be welcomed, although some specific plans are likely to do more harm than good if implemented literally
 

Virgin Media had a challenging quarter, with its early price rise driving weak subscriber figures and product spin-down, resulting in reduced revenue growth and an accelerated OCF decline

The market environment remains challenging with very competitive pricing on superfast and little push for ultrafast, but superfast pricing is easing and competitors’ ultrafast pushes should accelerate in 2020

Full fibre roll-outs remain a threat and an opportunity in almost equal measure, with Virgin Media’s positioning likely to be clarified as the regulatory mist clears over the next year

BT suffered a weak Q2 with revenue and (particularly) EBITDA declines accelerating, but this was mainly down to timing (particularly at Openreach, which will likely recover in Q3), with the company confident in maintaining full year expectations

BT’s fixed broadband business enjoyed some recovery as the pricing environment improves, but will suffer another price timing bump next quarter, and its mobile business is suffering from a tough market environment that is unlikely to improve in the short term

The company is busy re-branding, re-positioning and transforming, but the outlook for football rights costs and fibre roll-out regulation will dominate in the short term, and further bumps (such as the Virgin MVNO contract loss) may emerge

Mobile sector returns are low, particularly for smaller-scale operators, with H3G earning less than its cost of capital. Regulatory initiatives, spectrum auctions and 5G look set to worsen this picture as H3G strives to gain viable scale

Back-book pricing is crucial to the returns of fixed challengers. Regulatory intervention is likely to lead to a waterbed effect in the fixed sector and exacerbate challenges in mobile

New entrant business case in full fibre is limited to de facto monopoly opportunities. There is the potential for BT’s returns to increase markedly if it gets full fibre right but new entrants’ inferior economics are unlikely to offer sufficient investor appeal

Apple’s iPhone launch event was relatively light on iPhone, which shared the stage with games, TV, Watch, iPad and retail announcements

This reflects Apple’s developing priorities: as iPhone sales soften, it needs to find new ways to extract value from the wealthy user base it has spent a decade nurturing

Apple has embraced this new strategy, offering a range of cheaper points of entry into its ecosystem, making the lost profits back on accessories or content subscriptions

In China, Alibaba and Tencent compete for food delivery to expand access to a fast-growing source of mobile user data, using their chat and wallet super apps to funnel customers to their food delivery apps

In the West, the rivalry is direct between the food delivery apps – Just Eat, Uber Eats, and Deliveroo – and the costs of last-mile delivery dissuade challengers

In the UK, Amazon will change the game if it succeeds in its proposed purchase of a minority stake in Deliveroo, which Uber failed to buy last year. Progress on the merger of Amazon and Deliveroo is suspended by the regulator

Market revenue growth bounced back to all of 1% in Q2 after near zero in the previous quarter, with broadband volumes at a near standstill

Operators appear resigned to this however, with new customer pricing appearing to recover, and wholesale price cuts not to be repeated

On the downside, further regulatory and commercial pressure on existing customer pricing is likely, and pricing détentes are often short lived

TalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017TalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017

The subscriber drop was, however, modest and looks quite deliberate, with there being evidence of price firming in both direct and indirect channels supporting both ARPU and margin

This more cautious approach, if it can be sustained, puts the company on a much more healthy footing in our view, allowing it to achieve its financial targets without increasingly unsustainable existing customer price rises

Google’s advertising business has begun losing market share in the US, with competition from Amazon, Facebook and Microsoft intensifying in search and display

In response, the company is redoubling efforts to reshape its apps, services, and the entire web for more efficient monetisation, spelling uncertainty for partners and users

The adaptability and complexity of Google’s services reduce business risk from targeted regulatory measures, but increase the pressure for a radical intervention