As Spotify wavers around the breakeven point, the deal with UMG is good news for royalty costs and thus for the likely advent of the IPO rumoured for autumn 2017
Royalty costs will reduce if Spotify reaches the subscriber growth targets that have been agreed – these have not been disclosed, so are hard to track
Question marks persist over whether a two-week optional windowing of new releases on the premium tier will significantly drive upgrades from the free tier
Despite a slowing of circulation decline in 2016, UK national newspaper brands continue to face profound structural challenges, with print advertising spend expected to be down at least -15% for the year
In digital advertising, tech and distribution platforms continue to dominate growth with newspaper publishers and other content producers competing for an increasingly small slice of the revenue pie
In this context, many publishers are turning to paid membership and content subscription models to generate online revenues; success here will require a radical shift in thinking to a retailer mindset that delivers high quality reader experiences through integrated execution of tech, data, marketing and design
Streaming is now mainstream and we predict 113% growth in expenditure on subscriptions for 2015-18 in the top four markets (US, UK, Germany and France)
Free vs paid-for streaming is the central question for the music ecosystem: free yields fractions of pennies, making subscription the only credible business model
Market leader Spotify is facing competition from tech giants Amazon, Apple and Google, with deep pockets, for whom content is a pawn in a larger game
France’s number two telecoms operator has suffered extensive damage since the 2014 takeover by Altice, which engaged in a slash-and-burn leveraged buy-out. Market share loss has triggered a revenue decline, with uncertainty of when this might stabilise
Increased investments will barely allow SFR to stand still in the competitive race for 4G and fibre deployment. Cash flow, while in decline, is sufficient to meet high debt payments – but rising bond yields could pressure P&L
SFR aims to appeal to subscribers through enlarged bundles of content sourced mainly from Altice investments in media, but execution seems geared to achieve VAT optimisation and augment the group’s political influence – which may be needed as massive job cuts are planned
With the decline in its subscriber base accelerating and following an antitrust veto over its planned tie up with BeIN Sports, Canal+ has decided to radically restructure its retailing on IPTV – where over 60% of subscriber recruitment takes place
The basic channel package is now wholesale to ISPs and included in upper tier triple play bundles – much higher volumes should more than balance a deep price cut. Soon premium and optional packages are to be unbundled on all platforms to create cheaper entry points and favour subscriber customisation
Canal+ is thus increasingly focused on supplying premium content, leaving the user interface to ISPs. Without the scale of other international content producers and in a nationalistic political context, we believe that this market rationale will eventually lead Vivendi to sell Canal+ to Orange
After the dispute with Vivendi, Mediaset Premium faces mounting losses with no buyer in sight and increasing tension within the controlling shareholder family
Sky has managed to resume growth despite the loss of the Champions League (CL), mostly thanks to strong advertising sales
Next year, both CL and domestic Serie A, will auction the 2018-21 broadcasting rights. Sky will be in a position to substantially increase its range of exclusive football coverage
FY 2016 has been an excellent year, with all three Sky markets showing improved performance as Sky delivered 7% revenue growth (5% after adjusting for 2016 being a 53-week year) and 12% increase in operating profit
The success reflects Sky’s commitment to product and service innovation and diversification in an increasingly fragmented marketplace combined with tight control of back office costs and focus on synergies
As a measure of its success, Sky has set new cost synergy targets of £400 million annual run-rate by FY 2020 and is aiming for continuing middle to high single digit growth in revenues, which should let it comfortably absorb the rising costs of Premier League and Bundesliga live televised rights under the next contracts
Music publishing revenues are trending up in a broad sustainable manner across the US, Europe and Japan, underpinned by longstanding music rights regimes
Purchasing is down and streaming taking off, driving a mechanical to performance transition, with direct licensing of Anglo-American repertoire in Europe as in the US
Public performance revenues collected by PROs are also rising as live music grows, general business conditions improve, while TV audiences remain resilient
The decline in print display advertising in national newspapers accelerated to -16% in 2015, while growth in digital advertising is slowing, and will be unable to offset revenue decline for the foreseeable future.
We believe this decline is structural and irreversible, continuing at a sharper pace than before despite the recovery in the UK economy in 2013-2015, and very different from the cyclical decline of 2009.
Publishers must convince brands and agencies that in the mobile era their superior content environments have added value. If scale newsrooms are to survive, costs must be reduced through collaboration and outsourcing.
Google Home will compete against Amazon’s Echo in the contest to supply voice-activated home hubs to US homes
Google claims Home is better at voice-based search due to its superior capabilities; pricing is unknown, but is likely to be at par with Echo ($179)
Prime, Fire devices and media services are competitive advantages for Amazon in the US that will make it hard for Google Home to succeed there