The spatial computing ecosystem is on the uptick with the wider availability of head mounted devices (HMD). Apple and Meta’s commitment to developing HMDs is existential to conquer the enormous technical hurdles these devices continue to face. 

Apple has chosen to maroon the Vision Pro with a lack of controllers and other design choices making it reliant on mostly passive entertainment. In total contrast, Meta’s deep engagement in gaming and 3D experiences showcases the potential for the HMD category.

Live sports is the outstanding use case for TV experiences on VR headsets, with exclusive NBA VR programming on Quest bringing new levels of immersion and presence, while gaming, and its developers, will still remain the dominant driver for VR and MR for the rest of the decade.

Service revenue growth dropped off by 2.7ppts this quarter, and into negative territory, as operators in all markets suffered weaker growth
 

Operators in France and the UK implemented price increases this quarter but re-contracting absorbed any positive revenue impact. In Italy, regulatory intervention thwarted operator plans to raise prices
 

Increasing competitive intensity in France and Germany comes at a time when operators can ill-afford ARPU dilution and high churn
 

Sony PlayStation 5 and Microsoft Xbox unit sales crashed in the last quarter, despite promotional discounting. Neither company appears able to reverse a clear consumer shift away from fixed consoles. 

Nintendo Switch outsold Xbox and nearly matched PlayStation sales, even with the Switch 2 set to launch in 2025. 

A radical change in hardware strategy and leadership will be the best solution for Microsoft to demonstrate a growth narrative following its acquisition of Activision. Gamescom this month may provide more clues.

Service revenue growth was broadly flat at 1.7% as improvements in Germany offset weaknesses in Italy.

The impact of price increases has been mixed, with subscriber losses dulling their upside, and the mixed picture looks set to continue into Q2.

The market continues to be challenging with elevated competition at the low end, pressure from some regulators to increase network coverage, and a somewhat soft EBITDA outlook.

On 4 June 2024, Enders Analysis co-hosted the annual Media and Telecoms 2024 & Beyond Conference with Deloitte, sponsored by Barclays, Salesforce, Financial Times, and Adobe.

With over 580 attendees and over 40 speakers from the TMT sector, including leading executives and industry experts, the conference focused on how new technologies, regulation, and infrastructure will impact the future of the industry.

This is the edited transcript of Session Two, covering: Sky’s strategy; audience engagement with sport; the role of AI in journalism; and Amazon’s UK business and philanthropy. Videos of the presentations are available on the conference website.

Service revenue took a dip in Q4 to 1.5% as a waning price rise impact in the UK combined with the loss of positive one-offs in Germany.

We expect growth to slow further through 2024 as many operators implement lower index-linked price rises which are also coming under increasing regulatory scrutiny.

Vodafone has made progress on its turnaround plan—striking deals for its Italian and Spanish units—but it is not yet out of the woods, with ongoing challenges in Germany and approval still uncertain in the UK.

Many telcos are surprisingly advanced in exploring GenAI opportunities, mainly in gleaning cost efficiencies in managing their complex systems, but it may also provide a revenue boost.

European telco CEOs made a heartfelt—if not entirely convincing—plea for regulatory/policy help via a ‘new deal’ to help support future investment, highlighting a genuine lack of price/investment balance in European telecoms.

The most convincing specific regulatory/policy solution is in-market consolidation, with other steps either less effective, or unlikely to happen, but a general shift in regulatory attitude could prove helpful in many small ways.

Vodafone’s Q3 results were slightly disappointing following the green shoots of Q2, with growth in Germany slipping back again, albeit some of it already flagged.

It is difficult to imagine the full year results event being a positive catalyst with the likelihood of a dividend cut, a recognition of the hard-currency reality of the financials, and a still challenging outlook for FY 2024/25.

Deal-making is a positive counter with a highly accretive deal still in the offing in Italy, and the prospect of execution in Spain and the UK. Various inorganic deals with 1&1, Microsoft and Accenture will also be helpful, although none of them as valuable as an improvement in the core operations.

Sony PlayStation’s next CEO will have hard decisions to make: compete against a resurgent multiplatform Microsoft, or retreat and defend an increasingly rickety PlayStation console model.

New gaming hardware will have an outsize influence in the year ahead, giving gamers unprecedented choice, starting with XR headsets and continuing to a likely new Nintendo Switch.

YouTube’s foray into browser-based games will be the service to watch in 2024. If successful, streaming services, including Netflix, will be on track to become heavyweight game platforms.

Public service broadcasters are in a position to plan for the long term with commercial licences renewed for ten years, an updated prominence regime via the Media Bill and a government broadly supportive of the BBC.

With the Premier League and EFL rights secure to the end of the decade, Sky can plan for the future from a position of strength.

Relationships between Sky and the PSBs have improved markedly recently, and as all can now plan for the long-term, this should provide further opportunities to cement relationships for the benefit of the broadcasting ecosystem and viewers.