Revenues were stable year-on-year in Q3, with UK growth offsetting Continental decline. All three markets posted positive customer net adds across the quarter.
Underlying profitability is improving, and although World Cup-related changes to the football schedule depressed net income in Q3, they will lift it in Q4.
A possible sale of Sky Deutschland would make sense if it helps the buyer reach superior scale within Germany.
Amidst a wider economic slowdown in the UK due to the cost-of-living crisis and the rising trend of borrowing costs, the Q4 retail spending peak (27.9% of total retail in 2019) will continue to be the dominant theme for retailers and advertisers in Q4 2022
Pandemic work and life patterns more fully reversed in 2022, with offline retailing recovering. Online share is ticking down to a new baseline of c.25% of retail (excluding fuel), thanks to food stores, the main pandemic gainers—now 10% of the vertical and contributing a huge 15% of online retail spend
Online promotions (Black Friday, Cyber Monday) have gained traction over the years, drawing retail spend into November from December, and inevitably motivating a pull-forward of advertising expenditure, with online advertising increasingly focused on the bottom of the consumer purchasing journey, favouring intent over brand
60% of Chinese online ad spend is directly driven by ecommerce, compared to 40% in the West. The gap will close as content and ads move closer to transactions.
General search engines are not central to the customer journey in China: Baidu fell below 10% of online advertising last year, compared to Google’s c.55% share in the UK.
The Chinese model now has a vector to the rest of the world in the form of TikTok, whose parent company ByteDance added more retail GMV in China than Alibaba last year. TikTok wants to grow video shopping in the West, targeting a huge $470 billion in transactions by 2027.
The new Truss/Hunt tandem is a needed response to the crisis affecting the credibility of the UK Government in global financial markets over its decisions on economic policy, although it will take time to re-establish credibility and stability
The cost-of-living crisis is inexorably widening from goods and services to the interest rates paid by Government, businesses, and households, exacerbating the recessionary trend of the economy
Implications for UK TMT range from the recession in advertising expenditure in2023, to the delay of the Media Bill (including the privatisation of Channel 4), alongside complications for mergers and acquisitions of UK companies
Advertisers are rushing to create immersive virtual experiences to promote their brands, particularly on social gaming platforms with large built-in audiences. The interest shows no sign of waning.
We are in the very early days of metaverse marketing: formats are bespoke, costs are high and the data provided by platforms is rudimentary. Not all product categories are suited to a virtual incarnation.
The long-term promise is tantalising: advertising that is better than its real-world counterpart, that forges new relationships with customers, and that forms part of the product offering rather than just promotional activity.
The pandemic years boosted many businesses selling services on subscription in the UK: work-from-home gave people more time and money to widen the services they enjoyed in the home, such as gaming, entertainment and music, also boosting engagement with trusted news
The cost-of-living crisis dented the number of subscribers to OTT SVOD and news services in Q2 2022. Broadband and mobile are must-have; bundles of services (e.g. Sky’s pay-TV and broadband or mobile) are more resilient; yearly and multi-year contracts prevent churn relative to monthly contracts; and services that cater to passions (e.g. football) are always need-to-have
Subscription (or supporter) media and news services reaped the demand for trusted news through the pandemic, but now face a tough challenge to their toplines from the economic downturn—and also to transition to a sustainable business model for media audiences, while advertisers are also feeling the heat
Meta suffered its first year-on-year revenue decline in Q2, as long-standing challenges crystalise and an economic slowdown in the US dents display ad spend.
In response, Meta is retooling its products to neutralise threats from post-social competitors like TikTok, and trying to minimise the impact of data restrictions.
The long-term pivot to the metaverse is Zuckerberg's next big bet, but funding it depends on core business strength.
Market revenue growth continued to accelerate in Q2 to reach 3%, but broadband growth worryingly dipped as the lockdown boost waned.
Differing pricing dynamics (among other factors) led to very different outcomes for the main players, with BT’s growth surging to 7% while VMO2’s revenue stayed in decline.
Underlying trends of weakening broadband growth, keener pricing and customer bargain seeking point to slower growth ahead … until the next price increase.
Revenue decline accelerated in Q2 as the cost-of-living crisis appears to be impacting UK sales, but profits remained strong thanks to last summer’s Continental sports rights reset
In Italy, DAZN will return on Sky’s platform just in time for the new Serie A football season, filling a key gap in its aggregation strategy
Looking forward, thanks to its enhanced profitability, Sky has the flexibility to respond to the economic downturn using pricing and content
VMO2 struggled to fully capitalise on its price increases this quarter, with much of the benefits absorbed by retention discounts and tariff pressure.
EBITDA growth of 4% is nonetheless a solid result in a challenging market and guidance looks achievable, albeit not as easily as it previously did.
The opaque nature of the relationship with the new network company makes it difficult to establish whether VMO2 is capitalising on the current glut of speculative infrastructure investment, or is at risk of being a victim of it.