Netflix has always been highly secretive and released very few details about its international streaming performance in individual countries beyond the general statement that it is seeing encouraging progress everywhere

Now at last we can assess Netflix growth trends in the UK with a high degree of confidence as a result of a question added to the BARB ES questionnaire at the beginning of 2014, which is administered to large quarterly samples of 13,500 respondents

On the basis of BARB ES results for Q1 2014, we have revised our UK growth estimates upwards, believing Netflix paid for subscriptions to be above the 3 million mark as it heads into central Europe. Also most striking is Netflix’s popularity among younger households – clearly the cool thing to have

ITV has enjoyed another very positive start to the year, with a repeat 11% increase in adjusted EBITA, this time mainly due to strong NAR growth, further helped by a 20% increase in Online, Pay & Interactive revenues

Broadly flat ITV Studios revenues reflected timing and special factors, including negative changes in the exchange rate. Now the leading US independent producer of unscripted programmes after three further acquisitions, ITV has set its sights on growing scale in scripted content

Promising new opportunities at home and abroad look to be opening up for the ITV broadcast/online business through the expansion of ITV Studios. Nor has this gone unnoticed at a time of growing consolidation in the age of convergence, as indicated by Liberty Global’s acquisition of Sky’s 6.4% stake in ITV

2014 saw a fall in profits as BSkyB absorbed the £217 million step-up in the annual cost of PL rights and invested £60-70 million in accelerating growth in its connected offerings, but with strong underlying revenue growth pointing to a resurgence of profits in 2015

The annual results release was over-shadowed by the news of BSkyB’s proposal to create Sky Europe through the acquisition of 21C’s shares in Sky Deutschland and Sky Italia, where it sees great opportunities for revenue growth and cost synergies

Taking on a large increase in debt to finance the acquisitions when the next PL auction is about to strike sends out the message that BSkyB management is confident about the state of its business, has a clear view about the value of PL rights, and will not be side-tracked from the pursuit of its broader strategic objectives

The commercial non-PSB sector saw strong growth in share of total TV viewing of close to 40% as the multichannel TV homes universe doubled in the 10 years between the launch of Freeview in October 2002 and completion of digital switchover in October 2012, and even higher 50% growth in SOCI (share of commercial impact) thanks to the higher commercial airtime quotas of the non-main PSB channels

Even during the growth years, non-PSB channels that were present in 2003 felt a squeeze on viewing share and suffered losses as result of numerous channel launches that added to the long tail (Squeeze 1), and strong growth in the PSB families (Squeeze 2), which saw the total PSB share among the Top 25 channels in multichannel TV homes rise from less than 80% to over 90% between January 2003 and January 2014

Today, both the PSB and non- PSB commercial channel groups face the challenge of internet connectivity and increasing population of portable screens (Squeeze 3), and they are experiencing similar rates of decline. Yet, even if overall trends look the same, non-PSB viewing trends show significant variation by channel group and genre, to be explored further in Part 2

The British Video Association has released full year figures for 2013 for the UK home video market, which reveal that growth in digital video, especially in over-the-top subscription services e.g. Netflix, offset the fall in spend on physical media last year, reversing the previous downward trend

The bad news is that DVD’s decline is set to quicken, as the number of households with stand-alone players has begun to fall, though there should be some respite this year from sales of huge box office hits such as Disney's Frozen and Warner Bros.' Gravity

Ultimately, we see rising penetration of high speed broadband and connected devices including the TV set as a net positive, as more people have more ways to spend money on video, but the shift from purchase to rental and subscription options will mitigate the benefits

After a three-week long “messy and opaque” high drama auction Sky retained its broadcast rights for all Italy’s Serie A games for 2015-18 with a negligible 1% price increase.

Its rival Mediaset managed to keep hold of the top fixtures, but its coverage shrinks by 18% whilst paying 35% more. A deal earlier this year for the Champions’ League rights will add considerably to Mediaset’s total costs.

In the stagnating Italian economy, Sky may manage a return to more comfortable profitability. Mediaset’s pay-TV business model looks much more challenging, even if a new investor were to be lured in.

Ofcom’s fibre margin squeeze test’s initial indicative assessment concludes that BT’s current wholesale/retail pricing is ‘close to the boundary’ of creating a squeeze on its competitors

While BT can take comfort that it is at least close to passing the test, its DSL competitors (Sky, TalkTalk et al) can take comfort that BT cannot make life materially more difficult for them without failing it

Crucially, the costs of BT Sport are included in the test, so BT is now heavily dis-incentivised from further aggressive bids for sports rights, which is positive news for the prospective cashflows of both Sky and indeed BT itself

Market revenue growth in the UK residential communications sector was surprisingly robust in Q1 2014, rising a touch to over 5% (or around 4% excluding the direct impact of BT Sport) from just under 5% the previous quarter, despite facing a number of headwinds

Revenue growth at the top four operators has converged to around 4% for all, which marks a major long term turnaround for BT and TalkTalk, who back in 2012 were both experiencing firmly declining revenue well below market growth, and have since done much to stabilise their subscriber bases and sustain ARPU growth

Looking forward, we expect that BT will continue to do well in the June quarter given Sky’s continued focus on TV products, but thereafter its focus may change, and whether BT's recent competitive boost from fibre will continue growing is uncertain. Having said this, any likely market share shifts are relatively minor in the context of the market, with the general theme likely to remain that the rising tide is lifting all boats

Strong growth in the UK economy has created a very positive short term outlook for display advertising, with TV Net Advertising Revenues (NAR) expected to increase by 5% in 2014.

That bright prospect is nonetheless overshadowed by online video advertising, where 2014 is expected to add almost £200 million to the estimated £300 million spent in 2013. YouTube is leading the way, but the TV broadcasters also stand to benefit.

All the indicators point to yet more rapid growth in online video advertising over the next three to five years. So far it has had little apparent impact on TV NAR, but this should change from 2015 as TV and online video become more closely meshed.

The latest vision of Sky Europe under discussion between 21st Century Fox and BSkyB has 21st Century Fox maintaining its share in BSkyB at 39%, while BSkyB buys out 21st Century Fox’s interests in Sky Deutschland and Sky Italia

Agreeing the right price will be complicated by the contrasting fortunes of Sky Deutschland, which is enjoying a sustainable boom, and Sky Italia, which, although well run, is holding on to marginal profits in Europe’s most inflated football rights market and in a structurally stagnant and weak economic climate

Today, there appear only modest operating efficiencies to be gained from bonding the three Skys into Sky Europe; however, centralised content and service strategies may become much more important in coming years in an increasingly scale-driven European marketplace