For an unproven service to attract 1.3 million active users in its first five weeks is impressive. But by its own account, Quibi’s launch underwhelmed.

Sizeable subscriber targets—7 million by year one and 16 million by year three—justify a level of spend never seen in short-form video, but are ambitious for an experimental start-up with limited brand equity.

The service’s failure to recognise the social side of mobile media, restricted use case and, critically, lack of a hit show increased scepticism of product/market fit. Now Quibi must adapt the product with knowledge of user preferences and reassess its targets, provided it can afford to do so.

O2’s merger with Virgin Media seems more of a marriage of convenience than a determined pursuit of synergy benefits. With the owners effectively selling their stakes, the combination will be well-advised to exercise caution in any convergence strategy that they pursue.

O2’s results this quarter appear to be fairly decent with all metrics ticking up slightly, although caution is advised in interpretation and pressure on ARPU has not eased.

With the mobile sector reasonably well insulated from COVID-19 and O2 likely to fare better than most in out-of-contract discounts, the short-term outlook is relatively robust, but competitive and macroeconomic vulnerabilities remain on the horizon.

In response to COVID-19 and the associated lockdown and economic crash, advertisers have slashed budgets. Online budgets are not immune.

This has clarified features of the online ad market: it is demand-driven, relies heavily on SMEs and startups, and is built on direct response campaigns.

We expect online advertising to outperform other media, and for platforms to further gain share. But with a very few exceptions, this health and economic disaster is good for nobody.

2020 promises a year of transition for the games industry: eSports and games broadcasting are competing with traditional programming; game streaming services are becoming meaningful platform competition; and new consoles are on the way.

While most in the studio and TV industries continue to struggle with the games market—neither understanding (or seeing) a strategic fit, nor showing a willingness to invest—expect explosive growth to power the industry for the next decade and transform all entertainment services, not just games.

The ‘free-to-play’ games sector requires oversight and regulation to protect children and the vulnerable; expect regulatory turbulence in the UK, Europe and China.

With elections in the UK in December, and in the US in 2020, online political advertising is receiving intense scrutiny. Google has announced limits on targeting, while Twitter has banned politicians from buying ads

Facebook is the big player in online political ads, and it continues to allow targeted political ads, and to carve them out as exempt from fact-checking

Facebook wants to keep Republicans on side and surf the revenue opportunity, but pressure will increase with US elections, and we expect Facebook to bring in restrictions

In spite of total revenue growth of 4%, O2’s service revenue growth took another step down to -3% this quarter, consistent with the worsening environment and EE’s results 

Its true performance is likely better than reported as IFRS15 has an artificially dampening effect on its service revenue as a consequence of O2’s Custom Plans, and is something of a boost to its impressive 6% EBITDA growth

O2 needs to continue to pedal hard to keep ahead of this challenging environment – with little let-up on the regulatory front, more aggression from Vodafone and H3G, and a potential regulatory hit to its Custom Plans 
 

In China, Alibaba and Tencent compete for food delivery to expand access to a fast-growing source of mobile user data, using their chat and wallet super apps to funnel customers to their food delivery apps

In the West, the rivalry is direct between the food delivery apps – Just Eat, Uber Eats, and Deliveroo – and the costs of last-mile delivery dissuade challengers

In the UK, Amazon will change the game if it succeeds in its proposed purchase of a minority stake in Deliveroo, which Uber failed to buy last year. Progress on the merger of Amazon and Deliveroo is suspended by the regulator

Google’s advertising business has begun losing market share in the US, with competition from Amazon, Facebook and Microsoft intensifying in search and display

In response, the company is redoubling efforts to reshape its apps, services, and the entire web for more efficient monetisation, spelling uncertainty for partners and users

The adaptability and complexity of Google’s services reduce business risk from targeted regulatory measures, but increase the pressure for a radical intervention

After a period of significant outperformance, O2’s Q1 results reverted to sector average revenue growth with ARPU down by 3% and all of the growth coming from ‘other’ revenues

Regulation limiting out-of-bundle spending has been a significant drag which will continue to worsen

A more competitive market and a punishing regulatory outlook will make it very challenging to sustain 2018 growth trends as this year progresses

Video sharing platforms, like YouTube, Facebook Watch and Twitch, are vying to attract creators with monetisation options such as branded content and user payments.

Advertising income, already limited for many small and medium-sized creators, has been undermined by YouTube’s response to brand safety concerns.

The new tools come with their own obstacles, but are necessary to keep platforms attractive to video creators.