Service revenue growth remained firmly negative at -1.0% in spite of inflation of +2.1%, as competition remains intense and pricing power weak.
Operators are guiding to a 2025 EBITDA performance that is broadly in-line with, or weaker than, their 2024 performance, with SFR choosing to abstain from guidance this year.
In-market consolidation cries are getting louder, with France, Italy and Germany the most obvious candidates.
UEFA and Relevent, a newly appointed media rights sales partner, are already surveying the rights market for the next cycle starting in 2027.
With minimal competitive tension in major European markets, incumbent broadcasters are unlikely to increase their bids.
Relevent will, however, try to leverage increased US appetite for soccer to lure a streamer into a global deal.
Globally, subscriber growth remains the driver of topline streaming improvements—86% of Netflix’s 2024 global revenue growth came from subscriber additions, with 85% for WBD and 54% for Disney
However, in mature markets growth is underpinned by ARPU. Subs growth is becoming volatile with more customers churning in and out of services around key releases
Relevantly, the race to scale up SVOD ad-tiers will continue to have an ARPU-dilutive effect: CPMs are lower than expected and the growing price divide between premium and ad tiers will persuade more existing users to spin down
Geopolitical clashes between the US and Europe were a barely concealed undercurrent at this year’s MWC, with European tech regulation at odds with US moves, and telcos pitching for regulatory favours on firmer ground than they have had for years.
Perhaps the largest impact is on the satellite industry, with Eutelsat OneWeb having been given a new lease of life as the EU champion versus a now disfavoured SpaceX/Starlink.
AI was of course the talk of the town, but largely in ways that are tangential at best to traditional telcos, with the necessary building blocks for telcos to play a big role (i.e. network APIs) still needing much work.
Recent deals for Ligue 1, the Fifa Club World Cup and Foxtel signal DAZN is focused on global expansion, but this has postponed group breakeven.
Rights have been renewed at lower costs due to tepid competition and wider uncertainty in the broadcasting landscape, which support its improving margins.
Global scale may be a competitive advantage, but DAZN must still prove that global synergies improve local economics and generate a positive margin.
Service revenue growth dropped further to -1.7% this quarter as pricing remains under pressure and in-contract price increases no longer benefit
Competition is heating up in Germany and France, and Digi is taking an aggressive stance as it enters the Portuguese and Belgian markets
While there is increasing awareness that investment levels in Europe are compromised by the current market structure, support for in-market consolidation remains lukewarm at best at the EU level
The German football league will earn 2% more per season from its broadcasting rights for 2025-29, while European peers have faced declines at recent auctions
Sky and DAZN have maintained their relative value to fans: Sky expanded its coverage by 27 games, but lost the Saturday ‘Live-Konferenz’ feed to DAZN
The league has maintained wide free TV exposure, and leveraged strong fan demand for its second division
Sky UK and Warner Bros. Discovery have reached a deal for the pay-TV platform to carry WBD's Max, non-exclusively, when it launches in early 2026. The ad-supported version will be bundled at no extra charge for Sky and Now subscribers
The non-exclusive nature of the deal appears to have invigorated Sky into a restructuring of its packages, essentially unbundling Sky Atlantic for the first time
Under financial stress, most streaming platforms are increasingly focusing on third-party distribution. Thanks to bundling, top streamers like Netflix can increase the lifetime value of subscribers, while smaller streamers widen their reach.
Bundles of streamers may have some potential in the US, but in Europe—with Netflix not interested—they do not have the necessary scale.
This trend towards bundling favours incumbent pay-TV aggregators like Sky and Canal+, but in the longer run they face competition from tech video marketplaces.
UK football rights values have pulled further away from European peers in a stagnant market, as telcos have withdrawn and tech companies remain selective bidders.
Sky and Canal+ have tied down key contracts until towards the end of the decade, while DAZN now has domestic rights for four of the top five European football leagues.
Tech players want live sport, but have distinctive demands and without new monetisation models they will not challenge pay-TV incumbents.