And here I am at the fifth year of the Deloitte and Enders Analysis co-hosted Media & Telecoms 2016 & Beyond Conference. This grand, chandeliered hall is bursting with 400 of the most senior executives in the UK media and telecommunications industries including WPP, BT, Google, Sky, BBC and many many more.
Every attendee will have taken something different from the conference, but I would like to share my five main observations:
Convergence and Competition
In this low-growth economy and rapidly changing market, companies have a continued focus on M&A. In 2015, there were close to $1 trillion of TMT deals announced in 2015, a 60% increase on 2014.
A key focus of M&A is diversification. And most speakers had a convergence play, albeit each with a different focus. The rise (and rise and rise) of digital, mobile and social channels have continued to elicit dramatic changes in the media and telecoms landscape.
For example, I regularly make calls over the Wi-Fi on my mobile whilst in my flat. This relies on fixed to mobile convergence. It increases customer loyalty and reduces cost, as mobile operators don’t have to extend their network into every home: what’s not to like?
I am increasingly watching original content created by channels and distributors who have bet on the differentiation which owned content can provide, whether this be drama, comedy or sports rights.
These moves should enable media and telecoms companies to protect and ideally improve market share.
As companies converge, regulators (such as Ofcom) are finding themselves under pressure to ensure that the markets stay competitive. This prompted Frank Sixt, of CK Hutchison, to state that he had “enormous sympathy for the regulators” as they are “stuck in the middle”.
He is, of course, waiting for a decision from the EU commission on whether the Three-O2 merger will be given the green light.
Dawning of the Gigabit era
It seemed not too long ago that we were excited by a 10 Mbps connection speed. Now it seems that we are yearning for Gigabit speeds (i.e. 100x times faster).
Why? As people, households and businesses start to accumulate multiple connected devices, the demand for more bandwidth becomes higher.
Technology adapts and more “data gulping” devices are born to feed the consumer’s appetite for faster connectivity. #TMT Predictions – Gigabit Internet age
Ofcom’s latest communications report showed the UK as ahead of other European countries (namely Germany, France, Spain and Italy) in terms of broadband coverage and speeds. Yet, it should be remembered that as the world races towards gigabit connectivity, we need to ensure that the UK doesn’t get left behind.
Currently, the only way to get Gigabit internet in the UK is to have fibre all of the way to your property. This investment is already happening throughout Europe and the world. For example, AT&T and Google are making progress in the USA, and Vodafone is rolling it out in Western Europe.
Gavin Patterson, CEO of BT, gave us an update on their “Superfast Fibre Broadband” rollout (superfast is defined as +24Mbps) and the successful trials of G.fast that could deliver “ultrafast” speeds of +300Mbps via existing copper networks.
Tom Mockridge, CEO of Virgin Media, called for competition in the broadband space. Speeds of up to 200Mbps are already being delivered on Virgin Media’s existing network and a forthcoming network upgrade (from DOCSIS 3.0 to 3.1) should be able to offer Gigabit speeds.
He invited us all to email him directly to “Cable My Street” as part of the company’s £3bn “Project Lightning” fibre network expansion.
With my parents living in rural Cumbria I was tempted to call him up on his offer, but unfortunately I discovered that Cumbria wasn’t included in their list of 18 eligible counties. Unsurprising given that it has the second lowest population density of all English counties!
Digital Transformation and Measurement
Big Data is everywhere, and this conference is no different. Many of the companies presenting today imparted their strategies around how to monetise their data, focusing on targeted advertising on digital, mobile and social channels.
Transparency on how audience measurement is calculated on digital platforms such as Facebook and Google has been a concern in the advertising industry, and widely commented on by Sir Martin Sorrell, CEO of WPP, as clients want to understand their ROI. His comments were answered in part by Google’s Eileen Naughton who cited TrueView as an example of how they reduce the risk of inaccurate tracking of audience views, by not recording an impression if you skip an ad after 5 seconds.
Given Snapchat’s recent deal with Nielsen’s Digital Ad Ratings to provide measurement of the effectiveness of its ads, I feel that subsequent pressure on the remaining digital platforms will trigger an overhaul of how they interact with advertisers.
Educating the consumers on how advertising pays for the content that they enjoy for free can only go so far, as convenience is at the core of consumers’ behaviour. Levels of ad-blocking adoption on mobile is low at the moment (#TMTPredictions), but the CEOs of DMGT, Trinity Mirror and Guardian Media Group agreed that it is likely to increase, at least in the long-term.
Will Lewis, CEO of Dow Jones, emphasised the necessity for media companies (e.g. broadcasters and newspapers) to diversify their revenue streams outside of advertising, as to ask people to accept advertisements to pay for the content isn’t a long-term solution.
The overwhelming view from all companies was that legislation was not the answer.
Let’s keep it public
Without a doubt, the most impassioned speeches of the day came from the two public broadcasting channels. Lord Tony Hall, Director-General of the BBC, and David Abraham, CEO of Channel 4, made the case that they were instrumental in maintaining the unique UK creative ecosystem that currently exists.
As I am sat in this hall on International Women’s Day, I am struck by how few women are present (a point that is later made clear by Claire Enders, Founder of Enders Analysis, in her closing remarks). Of the 27 speakers today, 6 are women.
As a STEM graduate myself, this is sad to see, but not unexpected #TMTPredictions – Women in IT. I remain hopeful for the future as there are currently more women on FTSE 100 boards than ever before (now at 26.1%). In the meantime, at least I know that there won’t be a queue for the ladies at the breaks.
Sir Martin Sorrell, CEO of WPP, stated that “life is rugged and mucky” due to this year’s forthcoming uncertainties in the form of low growth, Brexit, US elections, Olympic Games, and volatility in global markets… I agree with him. But I think that it’s also an exciting time for businesses. Companies are diversifying and converging in ways that we would have never seen possible 10 years ago, to meet consumer demands and habits which we could never have dreamed would exist.
And so now, I bid you farewell as I prepare to binge on 10 hours’ worth of my favourite scripted drama programme streaming directly from a Video on Demand OTT service from my TV.