Market revenue growth was solid at 1.6% in Q4, but subscriber volumes were weak, and ARPU was supported by price rises.
Price rises will be much lower in 2024, with no ease in sight for volume growth, which will likely lead to much lower or even negative revenue growth.
The altnets are adding significantly to incumbent pressure, and their consolidation may ease or worsen this depending on its form.
While altnets continued their strong expansion in 2023, a slowdown in 2024 is looking very likely, with financing drying up due to tougher financial conditions and disappointing operating performances from some.
Consolidation is the obvious answer, and the altnets could consolidate into a pure wholesaler (via CityFibre), a retail/wholesale player, or could be absorbed into VMO2/nexfibre.
Which of these routes is taken, and how quickly, will have a profound impact on the structure of the industry, and all players should be careful what they wish for, with long-term outcomes hard to reliably predict in such a complex marketplace.
Meta's China risk is overstated: the spend from Chinese advertisers is diverse and resilient to everything short of a full-blown trade war.
Apple (and Tesla) are in the more precarious position of selling directly in-market, and face sharpening domestic competition.
Amazon's exit from selling in China still leaves it exposed: its marketplace strategy is built on Chinese sellers, whose potential routes to market are proliferating with local platforms going global.
Ofcom’s final statement on net neutrality addresses most of our prior concerns, leading to opportunities for UK telcos to effectively address internet congestion, and monetise their network capabilities.
BT is looking to take advantage of its new freedoms with new TV distribution services, which could save network capacity, improve user experience and earn it a share of the content distribution value chain.
We think that there are many other attractive opportunities, but telcos will have to work hard to sell any of them given the need to work together and reverse the bad blood that has developed with many content providers.
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
Ofcom’s plan to ban inflation-linked price rises creates a headache for most operators, but the financial hit will not be felt for years, if then (depending on their replacement).
Ofcom is correct in pointing out some of the drawbacks of the practice, but it will likely be replaced by an alternative tactic that may well end up being worse for consumers.
The unintended consequences could be significant, with a period of uncertainty for operators, low-end plans less appealing to offer, and poor signaling to investors in the sector.
Market revenue growth was robust in Q3 at 1.4%, but heavily supported by price rises whose effect will wane over the next year.
Broadband net adds remained negative, with pay TV and telephony more negative still, mainly thanks to strained consumer finances.
Declining volumes and waning price rise boosts are likely to lead the market into decline next year, with a recovering economy needed to reverse this.
Google and Meta both grew ad revenues at double digit percentages, with European results running well ahead of North America. The majority of UK publishers selling digital web advertising, by contrast, are seeing nothing like these results
Platforms are moving advertisers over to powerful, results-oriented campaign tools, which few competitors can match
The nature of the relationship between platforms and news publishers is changing, with Google and Meta wanting to avoid risk in their core businesses. AI could transform the relationship still further
Despite its scale, YouTube can get overlooked. But its tremendous reach and impact across all demographics make it the internet's universal service provider.
YouTube is still the golden child for creators who want to make a living from their content. For YouTube, this broad base of suppliers ensures a position of strength from which to claim a large revenue share.
Competition from TikTok took some of the shine off YouTube's usage, and forced it promote lower-monetising Shorts. YouTube is pushing heavily into subscriptions, TV sets, and premium content via sports rights to boost the money it makes per minute spent.
Market revenue growth surged to 2% in Q2, but entirely-and-more driven by price rises, with underlying trends negative across volumes and ARPU.
Broadband volumes in particular turned sharply negative, largely due to a post-lockdown hangover combining with weak economic conditions.
The outlook is bleak: price rise benefits are set to wane and then reverse, and weak volumes will feed through, with economic recovery needed for a return to sustainable growth.