Media trends report Q3 2011 Final


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Media trends report Q3 2011 Final

  1. 1. August 2011 MEDIA TRENDS – Q3 2011While mixed economic conditions and competition continue to impact the media and communicationsmarketplace the subscription television industry continues to see earnings growth and decreasedchurn. Industry investment and rationalisation is also reflected through the divestment and purchasedecisions of sector participants.This quarter significant price increases and product changes for over the top services in the UnitedStates and the cancellation of the iTunes television program rental option show that business modelscontinue to evolve. Marked increases in the cost of advertising on Facebook in major internationalmarkets is also indicative of the growth of social media advertising.The volatility of the tablet computer sector can be highlighted by the decision of Hewlett Packard tototally withdraw from that marketplace, the on-going patent action between Apple and Samsung andthe growing dominance of the iPad as supply for the past quarter was adjusted to meet demand.Convergence continues as the focus for Government and regulators both in Australia and the UnitedKingdom. The development of new and innovative content, across multiple devices, is reflectedthrough industry development and multiplatform investment. The first program in the United States toend its run on television and move online is also highlighted. STV DISTRIBUTION 140,000 subscribers in the quarter including ii conversions from analogue cable.UNITED KINGDOM AUSTRALIAVirgin Media sells stake in UKTV for £339M AUSTAR/FOXTEL merger: ACCC decision delayedUS company Scripps Networks haspurchased Virgin Media’s 50% stake in The ACCC requested further information fromUKTV. Scripps currently owns US TV brands FOXTEL and AUSTAR in relation to theincluding The Cooking Channel and the DIY proposed merger. The ACCC will announceNetwork. UKTV has a portfolio of ten a new proposed decision date on receipt ofchannels including Gold, Dave, Home, Watch, further information. iii iYesterday and Good Food. AUSTAR Q2 2011 results show subscriberOfcom reports UK digital take-up reaches and MyStar increases coupled with lower92.5% with take-up of digital pay satellite churnand cable services also increasing AUSTAR reported a net subscriber gain ofOfcom has reported that a Q4 2010 survey of 8,609 on Q1 2011. Customer churndigital take-up has revealed that 92.5% of UK decreased from 1.72% in the first quarter tohouseholds have now converted to digital 1.31%. The company reported that MyStartelevision. The contribution of subscription subscribers also increased by 11% on Q1 ivservices in the UK is recognised with a 2.5% 2011.increase in pay satellite services to 36.7% ofhomes and an increase in digital cable TV FOXTEL announces 17.5% earningstake-up to 3.8 million. At the same time growthBskyB added an additional FOXTEL announced a 17.5% growth in earnings (EBITDA) to $477m for the year Page 1
  2. 2. August 201130 June 2010. FOXTEL’s revenue for theyear ended 30 June 2010 was up nearly 10% DEVICE TRENDSto just over $2bn. The result was supportedby continued strong uptake of the FOXTEL iQ UNITED KINGDOM vand FOXTEL High Definition services. Launch of improved BBC iPlayer for ‘bigFOXTEL signs four year installation and screens’ via Playstation 3 Consolemaintenance contract with Downer The BBC has launched a new and improved iPlayer for TV with features such as contentDowner EDI Limited has signed a four year availability messages, same program episodecontract with FOXTEL to provide installation grouping, search results updates, previousand maintenance services for FOXTEL’s successful search results and previouslysatellite and cable customers in Adelaide, vi played episode data. The iPlayer also givesBrisbane, Melbourne and Sydney. the viewer the ability to navigate through other content while continuing to watch aUNITED STATES program. While the new iPlayer has initiallyTime Warner to purchase US Insight been launched via the Playstation 3 consoleCommunications for $3bn in cash the BBC plans to roll the service out to other ix connected devices.After months of negotiations, Time Warnerhas indicated it will purchase Insight AUSTRALIACommunications for US$3bn. Reutersreported that Insight is currently the 10th- FOXTEL on T-Box switched on in Junelargest cable operator in the United States. 2011Insight sells cable television, high-speedInternet and telephone services and serves The first stage of the FOXTEL on T-Box750,000 customers in Illinois, Indiana, service was switched on from Sunday 26Kentucky and Ohio. The purchase is set to June 2011. The service allows customers toexpand Time Warner’s reach into the US access up to 30 FOXTEL channels and a viiMidwest. selection of Catch-up channels including FOX8, Discovery and Movie One. The basicViacom Group reports 39% increase in starter service offers 11 channels for $19.50year over year profits Q3 2011 per month, with entertainment, sport and xViacom Group has reported a 39% increase movie packages from $10-$15 per year over year profits for the quarter endingJune 2011. Consolidated revenues in the UNITED STATESquarter grew by 15% to $3.77bn driven bygrowth in affiliate, advertising and licence Google buys Motorola Mobility for $12.5bnrevenues. Viacom said that the breadth of hitprogramming including tentpole events on The Google Inc. purchase of MotorolaMTV, Nickelodeon, Comedy Central, BET and Mobility gives it access to the part of theTV Land as well as international networks business that covers converged mobile viii devices such as smartphones and tablets;contributed to strong advertising growth. wireless accessories; end-to-end video and data delivery; and management solutions, including set-tops and data-access devices. It is also a move that has been reported as supercharging the android ecosystem. The transaction is expected to be finalised by the xi end of 2011 or early Page 2
  3. 3. August 2011MAX GO joins HBO GO with the launch of Last month Apple revealed that it had solda new mobile app on Apple and Android 9.25 million iPads in Q3 2011. This growth follows on from the sale of 4.6 million iPads inFollowing on from the launch of the the previous quarter. Apple’s decision tosuccessful HBO GO app in May this year double iPad shipments in Q3 resulted inTime Warner has launched MAX GO which significant growth at 183%. While the iPhonewill provide unlimited access to over 700 is still the biggest seller for Apple the iPad hashours of programming free of charge for now overtaken sales of the Apple Mac.Cinemax subscribers. The launch coincides During Q3 revenue from the iPad reached $6 xvwith Cinemax’s first original prime series billion.Strike Back. Along with the debut episode,MAX GO users will have access to a second Research company IHS iSuppli has recentlyepisode prior to its broadcast on the linear revised their forecast for tablet computers xiinetwork. sales figures up with Apple expected to account for 74% of media tablet shipments in xviNetflix growth stalls following monthly 2011.rate increaseNetflix has experienced a slow-down ingrowth following a monthly fee increase. Theincrease also followed Sony’s decision toremove their movie streaming service lastmonth. The pricing re-structure will seesome subscribers pay up to 60% more permonth as Netflix separates its DVD rental and xiiistreaming services.Subscriber decline continues for TiVoTiVo has continued to experience asubscriber decline with 456,000 subscriber Source: IHS iSuppli August 2011losses reported for Q2 2011. TiVo alsoreported a loss of $19.6 million for the quarter. Other manufactures have yet to make aIt was reported that the branded DVR had significant dent in the iPad’s popularity withexperienced losses as consumers switched to Hewlett Packard recently announcing thatgeneric DVR’s supplied by cable they are withdrawing from the tablet market. xivcompanies. The patent dispute between Samsung and Apple is currently involved in a patent dispute INNOVATION with Apple has seen the Galaxy Tab banned A FOCUS ON TABLETS from sale in the EU. Motorola, Lenovo and others are still developing their product lineWhile current patent action between Apple utilising the Google Android operating system.and Samsung has resulted in claims that thedesign of the tablet computer originally A recent report from InfoCom on Tablet TVfeatured in the 1968 Stanley Kubrick film usage has shown that Tablet TV apps can be2001 A Space Odyssey, the popularity of the an effective tool in mitigating customer churndevice is reflected through strong for subscription operators. They highlight thatmarketplace growth. while Tablet TV applications have primarily featured remote control functions Page 3
  4. 4. August 2011upgrades have resulted in the ability to AUSTRALIAwirelessly stream live TV and video on-demand. InfoCom note that the ‘service Australian original production Killing Timeappeal is the ‘entertainment anywhere’ starring David Wenham to premiere onpromise, enabling users to enrich their mobile TV1 in late 2011 xviiexperience with TV entertainment’. TV1 has announced that it will premiere the first six episodes of one of the most grippingIn the United Kingdom, the rating agency and controversial Australian stories everBARB has announced they will begin to roll produced starring well known Australian actorout a new measurement of TV viewing on David Wenham. The drama series isPCs and tablet computers to 100 of its panel inspired by the story of former criminal lawyerhomes over the coming months. The Andrew Fraser who made a fortune out of themeasurement will allow the ratings agency to Melbourne underworld and eventuallyexamine web TV measurement alongside xxi xviii became one of them.linear broadcasts. Multiplatform teen drama SLIDE attractsLast year Nielsen reported that up to 24 over 10,000 Facebook followers andpercent of Australian Internet users were makes twitter top trend for Sydney andconsidering purchasing a tablet computer in Australiathe next 12 months. The take-up of tabletdevices in Australia has enabled subscription The popularity of the FOX8 drama SLIDE hastelevision platforms and channels to continue been reflected through social build and expand their range of services Following the premiere of the program, on 16and content across multiple platforms. August 2011, #SLiDEFOX8 was one of the top ten trends on Twitter for Sydney andA recent report from Nielsen also highlighted Australia and likes on the SLiDE Facebookdemographic shifts related to tablet ownership page had grown to 10,550 followers as of 23in the United States that showed the over 55 xxii August achieving the highest growth in xixownership from 2010 to 2011. UNITED STATES NEW DEVELOPMENTS IN Netflix Inc. launches children’s channel PROGRAMMING Netflix has rolled out a new channel toUNITED KINGDOM subscribers. The new Just for Kids sections will allow children to search for content byOpening game of FA cup streamed live on clicking on their favourite characters. It hasFacebook for Budweiser fans been reported that Netflix worked with the not for profit group, Common Sense Media toThe first game of the FA cup was streamed determine which films and program should be th xxiiilive on Facebook on the 19 August, 2011. included in the Just for Kids section.The 90-minute live stream was available viaan application that Budweiser built for All My Children and One Life to Live firstFacebook. The match was only available to programs to end run on television andthose over the legal drinking age and fans move to online onlyhad to ‘like’ the Budweiser Facebook page to xxaccess the live stream. Long running US soap operas All My Children and One Life to Live are set to end a long run on broadcast television. It has been reported that both series currently have Page 4
  5. 5. August 2011unprecedented licensing agreement that will would see the first services licensed in August xxviisee them move intact from television to the 2012.internet. In the lead up to the end of theshows broadcast life a number of long- UK Communications Review for the Digitaldeparted characters will make return Ageappearances. Contract negotiations arecurrently on-going and the production A wide ranging review of the regulatorycompany is yet to announce whether the regime for the UK communications sector wascontent will be pay per view or advertising launched in May 2011. The Government has xxivsupported. commenced the review by opening a dialogue with all those interested in the issuesDirecTV offers popular NFL Sunday Ticket involved. As part of the process the Government will gather views on somestreamed live over PS3 for one off specific questions posted in an open letter topayment all those who work in the industry as well as bodies representing the interests ofNFL games will now be available for live consumers, citizens and the businesses thatstreaming on PlayStation 3 consoles. The xxviii trade online.DirecTV package will allow viewers to watchout-of-market games live on PlayStation 3 AUSTRALIAeven if they don’t have a DirectTVsubscription. The Sunday Ticket package Convergence Review Emerging Issues andfeatures up to 14 games a week in high proposed detailed papers xxvdefinition. As part of the public consultation process theApple removes TV program rental option Convergence Review Committee announcedfrom iTunes that they would release five detailed papers. These papers will cover Australian content;Apple has made to the decision to remove the spectrum; market structures and mediaability to rent television programs from diversity; layering, licensing and regulationiTunes. The 99 cent per program rental and community standards. Submissions forfunctionality has been removed but users can the Convergence Review Emerging Issuesstill purchase television programs through paper will close on 28 October 2011. xxviiTunes. National Cultural Policy Review announced REGULATORY DEVELOPMENTS Minister for the Arts, Simon Crean hasUNITED KINGDOM announced that the Government would conduct a review into how the arts andThe DCMS releases a new framework for creativity would be supported and developedlocal TV in the UK consultation document into the future. Submissions to the review xxix close on 21 October 2011.The UK Government is creating theopportunity for a new generation of local TV UNITED STATESlicences to be awarded through a competitivemarket based selection process run by FCC to officially remove the FairnessOfcom. Licensees will be able to broadcast Doctrine and another 86 rules relating totargeted and relevant local content including the medianews, current affairs and entertainmentprograms. The plan sets a timeframe Page 5
  6. 6. August 2011The fairness doctrine, which has been around TRENDS & TIPSsince the end of the second world warrequired licensed broadcasters to give equaltime to differing political views to ensure thatviewers had access to both sides of political IHS iSuppli has predicted that sales ofdebate. While some Democrats had called internet enabled consumer electronicsfor the rule to be actively reinstated over the devices will exceed PCs for the first timeyears it has effectively been out of practice in 2013.since it was abandoned by the Reaganadministration in 1987. The FCC ruling 3DTV’s are proving popular with UKremoves the doctrine so it cannot be consumers. Curry’s and PC World have xxx reported that one in five televisions sold inreinstated in the future. the UK are 3DTV’s. ADVERTISING In Australia free to air networks have removed their 3D transmitters from transmission towers.Global advertising spend up 8.8% in Q12011 with television increasing ad market Facebook has launched a new videoshare integration service using the Skype application that allows Facebook users toNielsen has reported that global advertising video chat with each other.rose by 8.8% year on year in Q1 2011 to totalUS$118 billion. Nielsen noted that published Nielsen has released research that showsrate cards showed that advertisers spent the majority of Netflix users watch contentmore on television and continued to invest in on the TV screen connected via a gamingthe consumer Asian and Latin American console whereas the majority of Hulumarkets. At the same time television users watch via a computer.advertising also increased its share amongst xxxiother traditional media. NBN Co has released details about a planned multicast feature that will enableAustralian subscription television high quality, high definition videoadvertising revenues increase by over 7% channels over the fibre network.An Ernst & Young report compiled for ASTRA GoogleTV is planning to launch in thefound that STV advertising grew by 7.4% from United Kingdom in the next six monthsfinancial years 2010 to 2011 to a total of according to an industry report.$385,921,612. The report also found thatnet ad revenues were $180,076,820 from 1 UK set top box manufacturer Pace hasJanuary 2011 to 30 June 2011 which was an released a new set top box that isincrease of 3.4% on the previous xxxii capable of offering full HD, 3D and are IPcorresponding period. ready.The price for Facebook cost-per-click adshas risen by 74% in the past year The Media Trends Report is created byThe Financial Times has reported that asurvey by TBG Digital has shown that the Infodec: forcost of Facebook advertising has increased 74% in four of the largest media markets xxxiiiaround the world over the past Page 6
  7. 7. August 2011SOURCESi Page 7