UK consumers bought £123 billion of goods online in 2023, up 63% on 2019 (vs 7% for offline). Online sales of non-store retailers, such as Amazon (and Temu, Shein, Next), reached £60 billion in 2023, of which Amazon—a nascent online advertiser in the UK—accounts for about £43 billion

The pandemic’s structural boost to the online channels of store retailers—which operate on the open internet, outside online walled gardens—lifted sales to £63 billion in 2023, up a huge 78% on 2019. With more competition for spend in straitened times, they are using advertising more aggressively

The open internet is also the domain for online-transacted services: the return to in-person experiences drove the biggest ecommerce gains since 2022, as consumers purchased services online worth an estimated £291 billion in 2023 and rising

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.  

The value of the domestic rights of major European leagues is falling due to the declining competitive intensity between broadcasters.

The Premier League’s new rights deal extends its lead, while Serie A faces a 10% fall in revenue next season and Ligue 1 struggles to get a flat fee.

Sky and DAZN have cemented their status as Europe’s top football broadcasters. Amazon has refocused to one game per week.

Book pricing has stagnated over the past two decades, leading to severe real-term declines in price per book. Nominal prices are now on the rise, but they are still swamped by inflation, and there is no prospect of them catching up to where they were.

The cost to produce books has been hit by many of the same inflationary conditions affecting companies (and people) across the board, leading to tough conditions at publishers, particularly small ones.

Fortunately, books offer many ways for publishers to price discriminate, charging more to price-insensitive, motivated readers.

European mobile service revenue growth declined this quarter to 0.3%, likely due in large part to the increased negative impact from the European roaming surcharge cuts, which we estimate at around 0.5-1.0ppts for Europe as a whole

The continued growth was supported by continued ‘more-for-more’ price increases coupled with strong data volume growth. Partially countering this, there has been a step up in competition at the low end in some markets, often driven by the smaller operators

Looking forward, the negative EU roaming impact is likely to decline from next quarter given the end of the summer holiday season, and on balance we would expect positive price increase trends to overcome negative low end competitive trends, at least in the short term. This might change in 2018, as Iliad launches in Italy, and recently consolidated operators become more of a threat

We estimate that UK online ad spend grew by 12.3% this year, with growth concentrated almost exclusively in mobile search and social in-feed advertising (particularly video), and mostly incremental to overall ad spend

Even after payments to publishers and distributors, Google and Facebook captured 80% of all net new spend in the market, and 96% of it flowed through their platforms

Despite improving standardisation and disclosure, the outstanding issues around measurement, the ad-tech supply chain, and particularly the obscure and growing Google/Facebook/Amazon segment, lead us to identify a large portion of digital advertising as a “grey market”: difficult to get a handle on, with uncertain beneficiaries and slippery definitions

Viacom’s 2014 acquisition of Channel 5 from Richard Desmond’s Northern & Shell occurred while the maelstrom encircling linear television viewing—sparked by the allure of SVODs and other digital distractions—was well underway

Nevertheless, with increased content spend, development of new titles and clarity as to its targeted audience, the broadcaster has increased its channel (and group) share amongst 16-34s and ABC1s, and has directed further benefits back to its owner's existing entertainment suite

Outside of the post-lunch and 8-10pm slots, however, work needs to be done: Channel 5’s BVOD proposition and social media offering leaves much to be desired, while the reliance on two major titles, Big Brother and Neighbours will be unsustainable in a post-linear world  

Digital advertising in the UK has been a phenomenal success story, but a concentrated one, such that many online media companies have not found a sustainable model

User payments are growing, but are currently focused on large, expensive bundles: Spotify, Netflix, the New York Times. This implements a hard division between free and paid and limits the potential audience

Micropayments and microsubscriptions are alternative models which content owners in certain media can use to address more types of demand. Multiple obstacles remain but for many companies the need to experiment has become critical

21CF’s bid for 100% ownership of Sky has been referred for a Phase 2 investigation to the Competition and Markets Authority (CMA), which will decide by 6 March 2018

Third parties Avaaz and Ed Miliband MP complain of the influence of the Murdoch Family Trust (MFT) and family members over the UK’s news agenda and political process 

A remedy could insulate Sky News from this influence. The offer of a Sky News Editorial Board at Phase 1 was refused. Third parties will ensure the debate in Phase 2 is very lively

Google has beaten Facebook in mobile revenue growth, and competes successfully in retail search with Amazon

Intelligent user interfaces based on machine learning have become a core competitive strength, with social and messaging the main remaining weak points

Rising political pressure due to Google’s growing scale and influence is now a bigger concern than commercial risk, as the threat of regulatory intervention limits strategic options in partnerships, M&A and integration