Search remains the main engine for Google’s core business, but display is rising fast: we estimate display gross revenue will reach $9.2 billion in 2013, representing 16% of projected gross revenue (excluding Motorola)

Gross revenue from YouTube looks set to more than double to nearly $4 billion by 2013. Revenues from Google’s ad networks and platforms are also growing strongly, mainly to the benefit of publishers

We project Google’s net revenue from display next year will amount to $4.2 billion, equal to 10% of net revenue from its total advertising business

Though likely to be appealed, the CAT’s dismissal of the Ofcom WMO remedy seems certain to cut off any further re-regulation of pay-TV in the next two years

The CAT decision hands Sky pricing power in the wholesale of its premium sports content, while forcing other retailers to switch their focus on to attempts to enter into commercial supply agreements with Sky

Financially Sky has potentially most to gain and VMed most to lose from the CAT decision, while BT’s strategy to expand its content offer is highly challenged

Reallocation of Burberry’s marketing spend to digital at the expense of magazines since 2009 has been a key driver of the brand’s increased global awareness.

Burberry’s digital activism is tied to its strategy of ‘democratic luxury’ to engage and cultivate a new generation of 20-something potential customers.

Other luxury brands also have digital tactics, but the scale and depth of Burberry’s approach suggests that it is alone in having an integrated retail and communications strategy.

Sky generated 14% growth in operating profits in FY 2012 in spite of a comparative 53 week reporting year in 2012, the price freeze induced by a tough economic climate and large incremental investment in programming

The increase was much as we expected with predictable strong growth in home communications, wash-through of TV and HD subscriptions, low churn and most notably improved operating efficiencies

The medium term outlook for operating profit growth in the existing business remains very promising, with further potential upside following the launch of NOW TV and the acquisition of Parthenon

Netflix returned to profit in Q2 2012 with results that were largely in the middle to upper range of its Q2 guidance estimates Underlying concerns remain about the ability of Netflix to deliver profit growth as it expands its international business due to weaker than anticipated growth in its core business of domestic US streaming subscriptions Reaching one million subscriptions since the January launch of Netflix’s streaming service in the UK and Ireland points to a marked slowdown during Q2 2012, suggesting breakeven will occur during 2014 at the earliest

Post financial crisis, the dynamics of the UK economy have been reset, as consumers shun credit-fuelled expenditure – the latest GDP data for Q2 2012, confirming the ‘technical’ recession, reinforces our view of an economy moving sideways rather than recovering.

Household consumption in real terms has been in moderate decline since Q4 2010, on real disposable income declines, in turn due to a combination of weak nominal earnings growth due to flat productivity growth, and high inflation.

Although inflation has decelerated markedly in 2012, we continue to expect household consumption to exhibit little meaningful growth for the foreseeable future, which in turn can only be bad news for media and telecoms companies.

This report contains our annual assessment and forecasts for recorded music, in the context, as always, of the implacable physical-to-digital transition in music consumption and purchase, which continues to drain the topline of the recorded music industry.

Although 2011 was another year of decline in global recorded music retail sales, these fell just 4% in 2011 compared to 10% in the previous year, on a strong year for the album in the top markets, notably Adele’s 21 album.

Globally, the CD remains the recorded music industry’s leading sales format – accounting for the majority of retail sales in 2011. Despite brisk retail sales of download to own (DTO) tracks and albums, and encouraging sales of subscriptions in 2011, sales of mobile formats (ringtones, ringbacks, tracks) have been in decline since the peak in 2008. This gives urgency to the industry’s successful transition to digital music purchase in their top markets.

Much of the consumption of recorded music is free-to-the user, whether licensed, already purchased or pirated. Live streaming is the top music behaviour, shifting from the computer to the handset via adoption of smartphones and the free apps offered on the iTunes and Google Play storefronts, amongst others. Pandora is the emblematic supplier of ‘smart radio’, and dominates this segment in the US. Smartphone adoption is also driving subscriptions to the premium mobile tier of Spotify, Rhapsody and similar services.

The centre of digital music purchase remains the download-to-own (DTO) track or album, which we estimate accounted for $4.8 billion of retail sales in 2011, roughly 10 times the level of subscription revenues. Apple has built an unassailable lead on the DTO segment, leveraging the ecosystem created for its devices.

It is well known that piracy drains the creative industries of retail sales, although the precise interaction between piracy and foregone sales is difficult to pin down. Anti-piracy regimes are being established to combat digital piracy of cultural goods, including music, but effective implementation is slow.

Our forecasts for recorded music sales do not factor in any uplift to retail sales from successful anti-piracy action. We expect retail sales of digital formats to surpass the CD by 2015, more or less stabilising the market’s topline revenues. However, sales of around $16.5 billion by that time would be just a fraction of their 2005 level of $30 billion.

Sky has launched NOW TV, an unbundled internet video service offering non-Sky households pay-as-you-go access to select Sky content, starting with movies, with sports added later in the autumn and TV shows to follow NOW TV addresses the growing opportunity for broadband TV, primarily appealing to the 8 million non-pay-TV households that have broadband – the same target audience as Netflix, LoveFilm, BT Vision and YouView We expect NOW TV to have only incremental impact on Sky’s financials, but it has the potential to put Sky in pole position in the nascent market for over-the-top TV

France’s Orange Sport closed last month after France Télécom declined to bid for a renewal of its four-year licence to broadcast Ligue 1 football. The future of its sister film channel, Orange Cinéma Séries, remains unclear.

The strategic aim for Orange Sport was confused from the start – standalone profit centre or loss leader, fully fledged alternative to Canal+ or add-on to it.

Orange’s premium TV project was a failure: we estimate its cumulative losses at €1.2 billion, while Orange’s broadband market share and retail price premium shrank during the four years of its operation. But it did arguably strengthen Orange’s hand in carriage negotiations with Canal+.

YouView, the hybrid DTT/IPTV service backed by the public service broadcasters, is here, but with an initial retail box price of £300 it will be heavily dependent on the subsidies offered by ISP distributors BT and TalkTalk The TV market has evolved since YouView’s conception in 2008, with many other internet-enabled options now available; its managed and integrated approach gives it some advantages but doesn’t make it a ‘must have’ We expect YouView to mainly appeal to Freeview and BT Vision upgraders and project take-up between 1-3 million TV homes by 2015, though if the product improves and pricing falls dramatically it could see faster growth