The Communications The Communications Market Report 2013 1 August - PowerPoint PPT Presentation

Ofcom analyst briefing Ofcom analyst briefing The Communications The Communications Market Report 2013 1 August 2013 1 August 2013

Agenda Market Overview James Thickett, Director of Research Key consumer trends Lisa Etwell, Senior Research Manager, Market Research The audio-visual industries Th di i l i d t i Jane Rumble, Head of Media Research and Market Intelligence Internet and web based content Internet and web-based content Chris Adams, Head of Market Intelligence for Telecoms and Networks The telecoms industries The telecoms industries Chris Adams, Head of Market Intelligence for Telecoms and Networks Post Steven Cape, Senior Analyst, Market Intelligence 1

2 Director of Research Market overview Market overview James Thickett,

Average household spend has increased year-on-year following years of decline year on year following years of decline £ per month (2012 prices) p ( p ) 6% Post 5.3% 5.2% 5.2% 5.2% 5.2% 5.1% 150 5% Radio 122.42 122 42 118 87 118.87 116.13 Television 113.04 113.51 112.75 4% 28.92 100 28.20 Fixed internet 29.13 28.41 28.93 28.91 3% 11.74 11 35 11.35 11.44 11 44 M bil Mobile services i 10 92 10.92 11.91 11 91 11.26 2% 48.65 50 47.74 Fixed voice 45.31 44.17 45.21 46.73 1% % of total spend % of total spend 27.98 26.62 25.33 24.52 22.48 21.61 0 0% 2007 2008 2009 2010 2011 2012 Source: Ofcom / operators/ ONS Page 31 Notes: Adjusted for RPI Figure 1.12 3

Take-up of key services and devices Year on year percentage point change: +1 +/-0 +/-0 -1 +/-0 -2 +6 +12 +2 +13 +8 +2 -8 100% 100% 80% 60% 94% 97% 84% 40% 75% 72% 72% 53% 53% 51% 44% 20% 24% 22% 7% 7% 5% 5% 0% 0% Page 25 Figure 1.4 Source: Ofcom research, Q1 2013. DAB take-up from RAJAR Q1 2013. 4

On average, each UK household owns 3 different types of internet-enabled devices different types of internet-enabled devices 100 1+ olds(%) 2+ n of househo 75 75 3+ 4+ 50 Proportion 86% 74% 5+ 59% 25 6+ 44% 30% 30% 18% 0 Page 281 Figure 4.25 Source: Ofcom research, Q1 2013 5

Take up of connected devices grows 60% Q1 2012 Q1 2013 51% 39% 39% 40% 24% 22% 20% 14% 11% 7% 5% 0% Page 25 Figure 1.4 Source: Ofcom research 6

Average mobile data use has tripled since 2010 has tripled since 2010 M di Median monthly data use (MB) thl d t (MB) 250 236 200 200 180 154 150 100 74 50 0 July 2010 January 2012 July 2012 January 2013 Page 292 Source: BillMonitor Figure 5.10 7

Fixed call volumes continued to decline and mobile call volumes down for a second year in a row Minutes (billions) Annual -9.2% -3.9% -9.8% -7.2% +5.2% +3.3% -0.8% -1.6% Change 150 141 128 128 125 125 124 124 123 123 122 122 121 121 115 111 103 100 2008 2008 2009 2010 50 2011 2011 2012 0 Fixed Mobile Page 311 Figure 5.1 Source: Ofcom/operators 8

The growth in text message volumes has slowed slowed Outgoing SMS message volumes Messages (billions) Messages (billions) 152 151 150 128 104 Post-pay 83 89 100 85 68 53 66 42 42 50 33 Pre-pay 68 63 61 52 43 34 0 2007 2008 2009 2010 2011 2012 Page 343 Figure 5.39 Source: Ofcom / operators 9

Fixed voice and broadband remain most popular bundle of services popular bundle of services Proportion of households 70% Other 60% 57% 60% Mobile and broadband 53% 7% 6% 6% 50% 50% 1% 1% 50% 2% 3% Fixed voice, broadband, mobile 8% 46% 1% 2% and multi-channel TV 9% 2% 40% 39% 1% 6% Fixed voice, dial-up and 1% 2% 40% 2% 1% multichannel TV 5% 21% 5% 2% 19% 19% 1% 1% Fixed voice and multichannel 29% 3% 29% 16% 3% TV 17% 30% 1% 5% 16% 3% 4% Fixed voice and dial-up 1% 1% 4% 12% 7% 4% 20% 5% 5% Fixed voice broadband and Fixed voice, broadband and 7% multichannel TV 5% 27% 27% 24% 22% Fixed voice and broadband 3% 10% 20% 19% 17% 12% 9% 0% 0% Page 30 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Figure 1.10 Source: Ofcom research 1010

11 Key consumer trends Key consumer trends Senior Research Manager Lisa Etwell,

The reinvention of the 1950s living room The reinvention of the 1950s living room 12

13

14 Returning to the living room…

15 Returning to the living room…

16 Returning to the living room…

17 Returning to the living room…

18 Returning to the living room…

19 …but bringing devices with us

20 …but bringing devices with us

21 …but bringing devices with us

22 …but bringing devices with us

23 …but bringing devices with us

We now talk about TV live, while watching Wimbledon Men’s Final Wimbledon Men s Final.... •1 1 million people tweeted worldwide •1.1 million people tweeted worldwide • 2 6 million tweets 2.6 million tweets • 80% tweets from mobile devices 80% tweets from mobile devices Source: Ofcom research, 2013, All with TV 24

The audio-visual industries The audio visual industries Jane Rumble, Head of Media Research and Market Intelligence 25

TV industry revenues grew by 0.8% in 2012 £12,185 £12,288 £11,112 £11,038 £11,664 £11,018 £12,000m 722 687 732 787 721 Other revenue 780 2,719 2,628 2,607 £9 000m £9,000m 2 577 2,577 2 586 2,586 2,598 BBC income 3619 3,547 3,486 allocated to TV 3,136 £6,000m £6,000m 3,470 3,470 3 576 3,576 Net advertising £3,000m revenue 5 251 5,251 5 300 5,300 4,839 4 839 4 596 4,596 4,277 4,064 Subscription revenue £0m 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 Page 161 Figure 2.35 Source: Ofcom/broadcasters 26

NAR falls for the first time since 2009 Net advertising revenue (£m) Growth 1 year 5yr CAGR £4,000m , £3,619m -2% -0.2% £3,576m £3,547m £3,471m £3,486m £3,500m £3,136m Commercial £803m £896m 1% 2% £905m £824m £808m £3,000m multichannels £786m £786 £386m £2,500m £563m £459m 4% 9% Commercial PSB £518m £588m portfolio channels £453m £2,000m Main commercial M i i l -3% 3% -5% 5% £1,500m PSB channels £2,387m £2,204m £2,159m £2,144m £1,000m £2,054m £1,896m £500 £500m £0m 2007 2008 2009 2010 2011 2012 Page 163 Figure 2.37 Source: Ofcom/Broadcasters 27

TV viewing remains resilient Average TV hours per viewer, per day 5 5 4 3 2 4.0 4.0 4.0 3.8 3.7 3.6 3.6 1 0 2006 2007 2008 2009 2010 2011 2012 Page 181 Heading 2.3.3 Source: BARB 28

Time-shifted viewing climbs but slower than DVR ownership... p 80% 67% 63% 60% 55% DVR take-up 42% 40% Time-shifted viewing 29% 18% 20% 10% 9% 7% 6% 4% 2% 0% 2007 2008 2009 2010 2011 2012 Source: BARB, all individuals 29

...and time-shifted viewing varies by genre Proportion of time-shifted viewing, by programme genre: 2012 40% 34 30 30% 30% 21 20 19 19 20% 14 12 10 10 9 9 8 8 10% 10% 8 8 3 0% ama oaps Arts aries ilms ment sure usic ious en's port fairs ews A Childre Dra Entertainm Hobbies/Leis So Documenta Religi Current Aff F M S N Source: BARB, DVR Individuals 4+. Total minutes of viewing to each programme genre 30

The public service broadcasters maintain the greatest share of viewing Audience share 100% Other 11.8% 11.4% 12.3% 12.2% 12.9% 12.8% 13.2% 2.3% 2.6% 2.6% 2.4% 2.6% 2.7% 1.9% Virgin Media 2.7% 4.0% 2.6% 4.3% 2.9% 2.7% 4.1% 4.0% 3.9% 80% 3.9% 4.0% 8.8% 8.3% 8.4% 6.8% 7.4% Viacom 7.6% 8.7% 5.9% 5.9% 5.9% 5.9% 6.0% 5.6% 5 6% 5.1% 5 1% UKTV 11.8% 11.5% 11.5% 60% 11.7% 11.5% 11.2% 11.2% BSkyB 23.1% 22.3% 22.7% 22.7% 22.6% 22 6% 22.6% 22 6% Channel 5 Channel 5 22.3% 22 3% 22.0% 22 0% 40% Channel 4 ITV ITV 20% 20% 32.7% 33.2% 32.3% 31.2% 31.8% 31.4% 30.6% BBC 0% 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 Page 194 Figure 2.70 Source: BARB 31

Seven percent now own a smart TV Top reasons people buy a smart TV Top reasons people buy a smart TV 80 % 60 % 51 40 % 40 % 33 33 29 25 25 18 18 20 % 0 % I needed a I liked the I wanted the I like to keep It was the I like the I wanted to new TV and look and best screen up with the best TV I range of stream TV decided to design of the latest could get for internet programmes/ buy one with TV technology my budget connected films/ video the latest services clips straight technology available to my TV Page 133 Figure 2.7 Source: Ofcom research, Q1 2013 32

Revenues from online delivery models increase by 38% Revenues (£m) 300 Annual Growth 252.4 250 Total 38% 183.3 200 27% 142.9 FTV views 140.6 150 112.8 153% Subscriptions 73.5 100 72.7 62.0 49.6 -32% 24.5 32.2 PPV transactions 22.3 50 50 21 4 21.4 18.8 15.0 44.1 39.6 41.0 17.1 8% 0 DTO transactions 2007 2008 2009 2010 2011 2012 Page 177 Figure 2.53 Source: Screen Digest. 33

Forty percent watch catch up TV services regularly regularly Video clips either streamed or downloaded 53% Catch up TV services either streamed or 40% downloaded TV and Film services e.g. Netflix/Lovefilm 16% 0% 10% 20% 30% 40% 50% 60% Page 138 Figure 2.13 Source: Ofcom research, Feb 2013. 34