Across Europe, markets are becoming more competitive. Incumbent pay-TV paltforms (e.g. Sky or Canal+) face increasing threats from both internet-based services (e.g. Netflix and Amazon), and telecoms operators

Telecoms providers are proving the most potent challengers as they enter the premium football rights market to create attractive triple and quad play bundles – examples include BT, SFR and Telefónica. The latter is now the main pay-TV operator in Spain whereas France’s Canal+ has entered into a strategic alliance with Orange

Across the top five markets (UK, France, Germany, Spain, and Italy), Sky remains the leading operator with an estimated 21.5m video subscribers, twice as many as Netflix

European mobile service revenue growth remained stuck at zero in Q1, with a heightened impact from the mobile termination rate cuts in Germany and price promotional activity in southern Europe mitigating improving markets in the UK and France

‘More-for-more’ price rises continued both during the quarter and after, and appear to be more widespread than the 2016 increases. This should be driving revenue growth at a healthier rate than zero, and may well do as out-of-bundle revenue declines fade away in significance and regulated MTR and roaming cuts annualise out

On the downside, there remain clear disruptive threats from consolidation in Italy, the potential for improved non-incumbent competitor performance in Germany and Spain, and the potential for further consolidation, with its distinctly mixed blessings for competitors, in the UK and France

UK mobile service revenue growth continued to improve, with EE now the clear leader in service revenue growth terms. The rate of improvement has started to slow, but pricing remains solid and data traffic continues to grow healthily

EE’s performance was helped by robust subscriber growth but mainly driven by its very strong ARPU growth, which is in turn driven by ‘more-for-more’ pricing and a service/content tiered pricing model. Others are starting to follow this approach

The short/medium term outlook remains healthy, with the price increases made in Q2 likely to more than compensate for roaming cuts in the latter part of the year.  Looking further forward, the launch of 5G could be disruptive due to the introduction of copious extra spectral capacity, and therefore the results of the upcoming auction will be key for the sector post-2020

A Netflix-like subscription model for console based video gaming is a big step closer with Microsoft launching a clear and easy Xbox subscription game solution, and it may even work

Sony’s strategy for premium online services across all its businesses remains muddled and complicated, but could be fixed quickly: dropping game streaming is the first step, providing a lower cost subscription service is the second

Google’s admission that more curation in its games app store will be needed finally indicates a better understanding of the games industry, in parallel with the company’s efforts to win over other creative industries

UK residential communications market revenue growth dipped 0.6ppts in Q1, from 3.3% in the previous quarter. This was mainly driven by ARPU weakness arising due to the timings of Sky and Virgin Media’s price rises, but weakness also stemmed from the sustained decline in broadband volume growth and continued new customer price competition

In competitive terms, BT and Sky suffered as a result of communicating price rises in the quarter, Virgin Media had a strong quarter if not quite as good as it was expecting, and TalkTalk manged to recover to positive retail broadband net adds at the expense of high marketing costs

BT, Liberty Global and TalkTalk issued profit warnings in the quarter, all of which were at least loosely related to increasing pressures in the consumer market. We expect these pressures – a slowing broadband market, an expanding Virgin Media, and a stabilising TalkTalk – to continue

BT had a reasonable quarter in its consumer broadband business given market pressures, and a very strong one at EE with continued growth acceleration. It had a good quarter for fibre adoption as well, helping its wholesale divisions stabilise their revenue, but business/IT was weak as expected

Regulatory pressure remains intense despite the (welcome) Openreach agreement, with price cap regulation proposed or due on a range of products, and a regulatory approach which is far from investment-orientated

Pressures in the business/IT market are likely to continue, and pressures in the consumer broadband market are likely to intensify, justifying BT’s current cautious approach to guidance and dividends

The “fair return” to US music publishers and songwriters for rights used by interactive streaming services will be decided in 2017 by the Copyright Royalty Board (CRB)

Rights owners want to switch to a fixed per-stream or per-user rate on all tiers, arguing music has an inherent value. Apple is asking for a much lower per-stream rate

Amazon, Google, Spotify and Pandora warn of disruption to free and ad-supported tiers if the revenue-share tariff is not rolled over, and the CRB could side with them

The successful launch of the Nintendo Switch creates a new console model, and demonstrates the staying power and long term value of great franchises

Microsoft reveals the specification for Scorpio, but it won’t be enough to catch up to Sony. New franchises, and probably new leadership, will be the key to stopping Xbox sliding into irrelevance outside North America

Sony’s PlayStation 4 now exceeds 60m units worldwide, allowing Sony more freedom to publish a wide range of challenging creative console games, while VR games continue to gain momentum

Virgin Media has run into network roll-out difficulties, having to revise down its previously stated homes passed figures and not committing to a full year 2017 target, with the current build run rate well below that required to hit its medium-term targets

Operating results were a little mixed, with ARPU showing signs of continued discounting and market-wide competitive pressures, and churn was higher than the previous year, but net adds were strong, RGUs stronger, and UK consumer cable revenue growth is still over 4%

Slower Project Lightning roll-out and weaker ARPU growth points to slower revenue growth during 2017 than might otherwise have been expected, but Virgin Media still has relatively strong prospects in a toughening market 

Enders Analysis co-hosted the annual Media & Telecoms 2017 & Beyond conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 2 March 2017.

This report contains the slides used by Tom Mockridge, Matthew Kirk, Andrew Griffith, and Geoff Moelis.