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One year on from the launch of the latest generation of gaming consoles Microsoft and Sony remain locked in a high stakes struggle for dominance of the gaming industry, and longer term viability of the console category.

Sony’s PS4, which we estimate outsold Microsoft’s Xbox One 3:1 in Q3, looks certain to win this round in a return to form for Sony following the relative disappointment of the PS3. Microsoft, struggling from missteps early in the Xbox One cycle, may have left it too late to catch up.

The wider games market continues to shift to mobile and online gaming, as developers seek to exploit the vast installed base of connected devices. New console gaming experiences from Steam and Amazon may be the primary growth driver for controller-based gameplay.

2014 has been a good year for total advertising, which we forecast to grow by 5.5% across the year; display advertising spend is also forecast to grow by over 6% year-on-year. This is largely thanks to a positive economic backdrop, where we have seen a significant rise in consumer expenditure over the last two years

Online advertising spend has been the biggest recipient of growing ad spend, with 20+% growth last year, this year and next. This has mostly been to the detriment of print revenues, where online classified search solutions, amongst other factors like declining circulation, have disrupted print marketplaces

Video has been the largest growth area in internet advertising as online video consumption increases. Up to now online spend has largely been accretive to TV budgets but we are starting to see some advertisers switch to online video spend. However we do not expect TV to suffer in the same way as press

Recently we attended the inaugural IABUK Digital Upfronts, in which 11 digital media companies pitched their wares to advertising agencies and advertisers.

UK growth in internet advertising is now powered by mobile, social and video, and these three areas were the focus of the Upfronts.

The Upfronts are symbolic of the rising importance of digital media in the UK and worldwide; while broadcast television remains the king of brand advertising, marketing and advertising are becoming less TV-centric.

UK consumers have embraced data-hungry services like Facebook and Google, but many also have concerns about privacy online; young people have a more positive view of the trade-off and know how to avoid targeted advertising

Businesses that are conscientious about consumers’ data gain their trust, and the gap between trusted brands and the market as a whole may grow substantially in the future

Despite Edward Snowden’s revelations on ‘Big brother snooping’, the UK Government has secured vast access to communications data without serious challenge to date

At its f8 developer conference, under the slogan “Build, Grow, Monetise”, Facebook rolled out a slew of new policies and initiatives designed to boost its appeal amongst users, app developers and advertisers

In its drive to encourage developers to build more apps that support the social network, Facebook is attempting to position itself as a “cross-platform platform” with 1 billion+ users that sits on top of iOS, Android and other mobile operating systems

Key announcements included App Links, an open source solution enabling linking across apps, which may drive additional usage, and Facebook Audience Network, an app ad network rolling out this year, which should drive additional margin and could challenge Google AdSense

Facebook has successfully transitioned its business to mobile, with the number of mobile users now exceeding those on PC, and mobile newsfeed ads accounting for nearly all revenue growth and over half of total revenue, now on a $10 billion annual run-rate

North America and Europe continue to account for the vast majority of revenue and revenue growth, despite flat audience penetration in both regions, as increasing mobile consumption and advertiser take-up have driven sharp increases in ARPU, particularly in the US

Despite tougher comparables and declining desktop revenue going forward, the rapid ramp up in mobile ad revenue, plus initiatives such as video ads, ads on Instagram and planned mobile ad network, should deliver strong growth through 2014 and into 2015

Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 4 March 2014. The event featured talks by 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette.


This report provides edited transcripts of the talks given by seven of those speakers: James Purnell, BBC; Dido Harding, TalkTalk; Nicola Mendelsohn, Facebook; John Paton, Digital First Media; Mike Darcey, News UK; Ashley Highfield, Johnston Press; Michael Comish, Tesco

In an audacious move to minimise the risk of mobile social disruption, Facebook is to acquire leading messaging app Whatsapp for up to $19 billion, or $42 per user, or 11% of Facebook’s current market cap

Messaging platforms are becoming the new social media, particularly for younger demographics, and while Facebook/WhatsApp will be huge in mobile, other services could still side-step into Facebook’s territory

 

The price for WhatsApp may be justifiable to counter the threat, but Facebook has only bought one of many, and paying a full price may encourage the others; expensively buying every competitor does not feel like a long-term strategy

Explosive growth in take-up of smartphones and tablets means that the effective size of the internet will increase by several multiples within the next few years. This transformation in scale comes with a major change in character and operating dynamics, creating new opportunities and revenue streams.

Twitter is unique amongst social apps: it gives new users a blank canvas in which they can (and must) create their own social network reflecting their own interests, hence building an ‘Interest Graph’, but onboarding new users remains a challenge.

Revenue at Twitter is now on a $600 million annual run-rate, scaling rapidly since the introduction of ‘native ads’, and seems set for further growth: the key question is whether it can achieve breakout user growth and mass market scale.