Research Roundup April 2022
Updated: Jun 21, 2022
Public Service Broadcasting set for a shake-up, UK’s TV Market Past, Present and Future, plus ISP, government, and Ofcom updates
UK public service broadcasters (PSBs) and linear television set viewing remain a popular outlet for many viewers, but for how long? On 28 April, DCMS announced its Policy Paper - Up next - the government’s vision for the broadcasting sector which will usher in the modernisation of the public service broadcasting market. DCMS’ proposed legislative reforms aim to bring PSBs firmly into the 21st century competitive landscape, whilst ensuring that internationally recognised British productions remain a dominant player in a saturated marketplace and attractive investment opportunity.
In March 2022, Point Topic and Netgem commissioned YouGov to conduct a survey on video, ISPs and what channels people were watching. The survey revealed that the digital TV landscape has shifted significantly toward online channels, but the market is congested with choice and can result in a fragmented experience for the user. Streamlining of services will result in a changing landscape for the streaming giants, as consumers seek out curated services available via their ISPs. Whereas a wide range of choice was considered a selling point in recent years, consolidation of affordable content services will be the step-change in the marketplace in the near future.
Key findings and overviews can be found below and on our free analysis section with detailed reports available via our UK Plus subscribers service, sign-in here to access our UK Plus content.
The UK’s Television Market Past, Present and Future
Point Topic and Netgem commissioned YouGov to conduct a survey on video, ISPs and what channels people were watching. The report, published on 9 May, shows that the results paint a picture of a market in the process of fragmenting itself once more after a period of slow, stable transition from analogue aerial only delivery, via a couple of dominant online channels and providers to today’s picture, a crazy paving of subscriptions (paid and free), channels, providers and choices, choices, choices.
Key findings
• Unsurprisingly aerial ownership is on the wane with already less than 50% of respondents in London and Scotland owning an aerial • YouTube tops the charts as the most regularly viewed streaming channel amongst survey participants • Netflix still leads the SVOD market, but showing signs of decreasing its dominance as it loses a record number of subscribers and clamps down on password sharing • Consumers want choice, but they also want a consolidation of services; just over a third (33%) of respondents would change their broadband provider if they offered a bundled curated TV package • Consolidation of affordable content services will be the step-change in the marketplace in the near future.
TV Past
Delivery today is all digital, increasingly online and available on the go.
We asked survey participants, Do you own an aerial? The responses can be viewed regionally as per Figure 1 below.
Results indicated that there were some regions (London and Scotland) already with less than 50% knowing they currently have an aerial to watch TV. This has been slipping for a few years, according to other sources , and now with a majority abandoning the long-established delivery mechanisms the traditional, linear, model with tens of millions watching event TV on a weekly basis is disappearing.
TV Present
Viewers can now view an incredible amount of content across various digital platforms. However, having more methods of access, such as Smart TV, tablet, laptop or mobile device does not necessarily equate to ease of access to content.
If you want to watch the main terrestrial channels (publicly funded or ad supported) online you need to register and sign-in to multiple platforms, sometimes just once, but still a barrier.
Survey participants were asked, Thinking specifically about how you use your TV set or monitor to watch video content...Which, if any, of the following streaming devices/services do you ever use? (Please select all that apply).
Content consumers accessing streaming services use a variety of methods (Figure 2), however nearly a quarter of respondents (23%) do so directly from their Smart TV. The TV still dominates the living room in the UK and vendors are slowly improving interfaces as well, although that can be a major challenge.
Bundled broadband and TV packages take-up
Just over a third of participants (34.8%) that do take a bundled service are opting for the larger players. For example, of those participants who have a bundled subscription service, 72.2% of them are using Sky as compared with 56% subscribing to Virgin Media. However, this is not the case for BT’s over the top service, where only 26% are subscribing to a BT TV and broadband package.
Talk Talk came in with an 18% share followed by NOW with 17.6%.
Channels and Streaming Services Viewing Today
We asked survey participants, Approximately how often, if at all, do you watch each of the following channels / streaming platforms?
Respondents had several options in terms of the frequency in which they viewed content we are looking at the number of participants who watched a service more than once a week or more
TV Future
In the UK, the adoption of TV and video streaming services has steadily been on the rise in recent years and saw an unprecedented rise in adoption levels during the COVID-19 pandemic. Despite viewers spending less overall time watching TV since national lockdowns have eased, they have not lost their drift to viewing content via online streaming services.
With the diversity, choice, and fragmentation of online streaming services available to UK consumers the future of these services as standalone products will start to slowly lose their appeal. As HBO found out in the 80’s your subscribers can churn away quickly.
Given that a large proportion of UK households subscribe to at least one SVOD service (e.g. Netflix, Prime Video, Disney+) whilst also accessing catch-up BVOD (iPlayer, ITV Hub) content (87% of all respondents asked), users personal TV habits are beginning to focus on a handful of services that cater to their needs.
The savvier and more wallet conscious UK TV consumer is likely to subscribe to a service that is more fit for purpose and curated by an Internet service provider, such as Sky who for several years have been market leaders in providing an all-in-one curated service for broadband and TV consumers.
With streamlining of operations, exclusive channel partnership agreements and slick marketing campaigns Sky has succeeded in providing a one-stop shop for subscribers who want to avoid the fragmentation and costliness of individual stand-alone subscription services. Considering this trend for the future, the winners in the UK TV market will be the ones that offer consumers a curated choice at an affordable price and a convenient way of accessing the content.
Bearing this in mind, we looked at survey respondents’ propensity to switch providers and asked, Please imagine that a broadband provider were to offer all/most of the video channels you would like to watch as a bundled subscription, with one bill covering all of the services and devices you use. How likely or unlikely would you be to change your existing broadband provider to receive the above bundle?
As we’ve seen a third of respondents would be likely to change ISPs if they offered a more bespoke service that appealed to their viewing habits (33%) of which a quarter of participants stated that they would be somewhat likely (25%). Eight per cent stated they would be very likely to change, and the same proportion said they are currently signed up to a bundled broadband and TV service of their choice.
When looking at this topic by region (Figure 4), consumers in the North East (41%), South East (36%), Scotland (35%) and the North West (34%) would be most likely to switch if the right service was offered in their area. Worth noting is that Scotland (15%) and both the North East (15%) and North West (19%) are among the regions whose TV viewers never use their TV aerials to view video content.
Conversely, survey participants in the East of England had the largest proportion respondents who would also be unlikely to switch (50%), followed by Yorkshire & the Humber (48%) and Wales (48%). The latter two regions have the largest percentage of participants who use their TV aerials every day, coming in at 54.2% and 56.2%, respectively.
Survey results regional ISP market shares unweighted and weighted by footprint
There are some significant regional variations in market share from the survey data. While this is in part due to the relative coverage of those areas by different ISPs, we cannot ignore the potential of actual local variations in which ISP is adopted. Perhaps they have marketed particularly well, or they offer services that appeal to a locally dominant demographic.
Care should be taken reviewing or using these outputs. We hope to repeat this survey later in 2022 which will result in additional data for better analysis.
Figure 5 shows the regional market shares for BT, Sky, Virgin Media O2 (VMO2), Plusnet, TalkTalk, EE and Vodafone. Both BT and VMO2 have the largest market share in five of the twelve regions (excluding England as nine of the regions comprise England as a whole). This is likely due to the size of their footprints along with the faster speed packages available.
Conclusion
The digital TV landscape has shifted significantly toward a fragmented congested place for the consumer. Streamlining of services will result in a changing landscape for the streaming giants, as consumers seek out curated services available via their ISPs.
More consumers using more online channels – we expect to see this increase in our next survey round expected Q4 2022
More users getting their video via IP and putting more traffic through their ISPs – but the OTT picture is changing
More and more the giants like Netflix are signing deals with ISPs to offer their services in a bundle…which it turns out many consumers like
The power is shifting. Where once the ISPs were just the passive vehicles for video now, they are increasingly the gatekeepers and even profit makers using content to attract subscribers and curated bundles to keep them.
For further details head to our Free Analysis section.
News
News Round Up
AltNet operators have continued their full fibre fixed network rollouts during April at pace as operators announced further expansion of their services throughout the country along with securing additional rounds of investment. On 14 April, Hyperoptic announced it would be investing £200m in 2022 building out its full fibre network. This investment will see Hyperoptic connecting all types of buildings, including terraced houses, maisonettes, converted houses and detached properties. Hyperoptic’s network now passes over 825k homes and businesses, and serves over 230k customers, with the further expansion to pass an additional 400k premises by the end of the year. ITS Technology Group announced on 25 April that they have secured a further £100m in funding from their current backer, Aviva Investors. With the additional round of funding ITS plans on accelerating its full fibre rollout plan, known as ‘Faster Britain’, and reported that they are on track to pass 25 per cent[1] of UK premises by the end of 2022. Typically focused on the business connectivity market, ITS are deploying XGS-PON technology across its network, which aims to pass around 150k premises by the end of the year. On 8 April, Netomnia announced that they had secured a new round of funding for £295m led by DigitalBridge Investment Management. Netomnia has passed more than 130,000 premises since their rollout has commenced in 2020. Openreach has continued to quicken its FTTP rollout at pace and are now nearly 30 per cent of the way through its 25m premises passed build ambitions by 2026. According to their Q1 2022 results published on 12 May, BT Group stated that they had passed 7.2m premises, with a run-rate of 58k per week and had around 1.8m end customers, a growth of 263k in the quarter which was accelerated by Equinox, with 42 communication providers having signed up to the scheme. On 14 April, Openreach announced a further 36 urban and rural fibre first locations throughout the UK. Around half a million homes and businesses were added to the plan in locations such as: Accrington, in Lancashire; Boldon, in Tyne & Wear; Dudley, West Midlands; Hornchurch, Greater London; Kemptown, East Sussex; Manningham, West Yorkshire; and West Houghton, in Greater Manchester, which means overall, more than 2,700 towns, cities, boroughs, villages and hamlets are now included in the company’s build programme. Also on 14 April, Openreach released Tranche 8 batch of 46 UK exchange areas where they will be moving away from copper-based analogue services, with the stop-sell coming into effect on 9 May 2023. The latest batch will cover around 380k properties and to date the stop-sell policies are now active in 250 exchanges, covering around 2.7m premises. Stop-sell notifications including trial exchange areas to date include around 600 exchanges covering around 5m premises. Virgin Media O2 (VMO2) published its Q1 2022 results on 11 May and reported a lacklustre fixed-line performance with a net reduction in broadband subscribers by 8k compared to net adds of 53k at the close of December 2021. This may be due to consumers proceeding cautiously at the start of the year with many experiencing a wallet crunch, coupled with overbuild by other networks (mainly Openreach, but increasingly more so by AltNets). Moreover, VMO2 eased off their promotion and marketing campaigns in January and February whilst announcing a price increase coming into effect in March, all which will have been contributing factors in their dramatic downturn from the previous quarter. This is likely to be a trend that will continue during the rest of the year as overbuild continues and consumers feel the economic crunch more intensely. VMO2 announced on 5 April that it will be expanding its FTTP network in County Durham over the next year. Since 2015, it has invested £24m in the area and its DOCSIS 3.1 footprint in the County covers just over 42k premises. On 20 April, VMO2 announced a wide-ranging pack of 4G/5G network expansions and upgrades across the Greater Manchester region. The company’s 4G network has been significantly upgraded over the past 12 months, with capacity boosted in almost 20k postcodes across the Greater Manchester region. Manchester now has superfast 5G coverage provided by operator that reaches 57% of the population. The network provider announced on 26 April that its business division is continuing to adjust its standard fixed wholesale tariff rate and reduce prices across its Dedicated Internet Access (DIA) bandwidths and National Ethernet wholesale services. For DIA services, VMO2 Business is reducing its fixed wholesale prices up to 2.8% per annum across both fully managed (including Network Termination Unit (NTU) and router), and partially managed (NTU only) across 100 Mb, 1 Gb and 10 Gb bearers. On 6 April Sky UK announced the launch of its fastest ever broadband package with downlink speeds of up to 900 Mbps, with a guaranteed speed of 600 Mbps for £55 per month with an 18-month contract. On the 12 April, Sky announced that it would be introducing its standalone IPTV streaming device, Sky Stream pucks, which would allow the consumer access its TV content over broadband without the need for a satellite dish. The operator launched its wireless ‘Sky Glass’ product in October 2021, which required subscribers to commit to also taking their own-branded Sky Glass TV as part of the service. The pucks were available at the time of the launch as a standalone TV box for consumers to use with their own model TV’s, however under the proviso that they sign up for the Glass product. Sky will be making the pucks available to consumers later this year, however no further details regarding packages and pricing were forthcoming in the announcement. Also on 12 April, Sky Broadband and its sibling brand NOW Broadband launched their ‘social tariff’ for low-income broadband subscribers. With the cost-of-living crisis looming larger for many, Ofcom has putting pressure on more ISPs to offer a ‘social tariff’ for those in receipt of Universal Credit (approximately 4.2m UK households). However, the regulator has reported that only around 55k households are taking advantage of the tariff. Currently BT, G.Network, Hyperoptic, KCOM and Virgin Media O2 are offering discounted broadband packages for low-income customers. Sky’s ‘Broadband Basics’ and NOW’s ‘Fab Fibre Membership’ packages include 35 Mbps downlink broadband speeds along with pay as you talk phone packages for £20 per month for 18 months with Sky and on a monthly rolling contract with NOW.
BT Group News
· 6 April – Approximately 7.4k premises in Kent were affected by malicious fire damage to Openreach’s network leaving residents in the Staplehurst and surrounding area without phone or broadband · 7 April – BT Group to award highest pay rise to frontline workers in over 20 years; Following the conclusion of negotiations with the Communications Workers Union (CWU), BT Group plans to award all frontline workers across each of its brands (BT, Openreach, Plusnet and EE) a £1,500 consolidated pay increase to their annual salaries, effective from 1 April 2022 · 12 April – Openreach announce launch of FTTP Advanced install Pilot, which has been developed to address the complex requirements of business and public sector end customers where the existing Standard and Premium journeys don’t currently meet the end customer requirements. · 19 April – Openreach announce the launch of EAD Rugged 1Gb which will be available to CPs from the 17 May 2022. EAD Rugged is a new strategic solution designed to replace Openreach’s legacy Street Access portfolio and will be available from17 May · 20 April – Openreach announce further FTTP network expansions: 38k homes in Lancashire investing £11m in the project, 60k homes in the Tyne and Wear area with £18m being invested in the rollout · 23 April – ISPReview reported that Openreach are currently consulting with ISPs to propose putting forth a ‘stop sell’ notice on their sometimes troublesome FTTP on Demand (FTTPoD) product, which may be introduced by late 2022 · 27 April – BT and Toshiba launch first commercial trial of quantum secured communication services; EY becomes first commercial customer to connect quantum secure data transmission between its major London offices.
Virgin Media O2 (VMO2) News
· 13 April – VMO2 publishes its new diversity, equity, and inclusion (DE&I) strategy, All In, Virgin Media O2 is introducing a series of ambitions to help it better represent the diverse communities it serves across the UK and includes measures covering gender parity, aims to have 15% of the company’s wider leadership teams and 25% of its wider organisation from minoritised ethnic groups · 26 April – VMO2 announces the launch of its new plug and play streaming service – Stream – which provides subscribers with an all-in-one curated online TV experience that includes live TV channels along with Netflix, Disney+, Prime Video, BBC iPlayer, ITV Hub, Starzplay, BritBox and YouTube along with TV subscriptions including Sky Sports and BT Sport. The service is available on a monthly rolling contract basis.
CityFibre (CF) News
· 12 April – Begins construction of FTTP network in Luton and Dunstaple as part of £45m investment project · 14 April – CF announced the rollout in Bognor Regis; which will include all villages between Pagham and Elmer and is part of the operator’s £195m plans for West and East Sussex, with construction in progress across the region including in Chichester, Adur & Worthing, Crawley, Horsham, Eastbourne and Brighton & Hove. A new project is due to commence in the Littlehampton area shortly · 21 April – CityFibre has now made the majority of homes in the Wollaton area of Nottingham ‘ready for service’ · 27 April – CityFibre brings full fibre to Gateshead & South Tyneside in £42m build · 28 April – CF is set to invest £17m in Kettering; Construction work will begin in early May around the Northfield Avenue and Rockingham Road area in the north of the town.
Independent Operators (AltNets) News
· 4 April – Brsk confirm they have passed 27k premises in England with 2k customers in just 10 months · 5 April – High bandwidth wholesale supplier, Virtual1, announce it has been acquired by TalkTalk for an undisclosed sum; TalkTalk and Virtual1 now expect to achieve a combined Ethernet Access Direct (EAD) market share of 25%. · 5 April – Voneus announced new FTTP build plans for 17k premises in Oxfordshire and Warwickshire due to commence in May 2022 · 5 April – Zzoomm rolls out 6 months of free broadband with new 24-month contracts · 5 April – BeFibre (along with its network builder sister brand Digital Infrastructure) reveal full FTTP rollout plan for 2022; Stalybridge, Ramsbottom, Heswall, Dinnington, Glossop and Gamesley, Thornton and Hambleton, Mossley, Wickersley, Hadfield and Hollingworth, have been announced for the North. Gloucester’s Bowden Hall, plus Uppingham, Corby North and Oakham in the centre of England, are also on the 2022 roadmap; This could see BeFibre have 200,000 properties ready for service (RFS) by the end of the year. · 6 April – Toob announce they will be investing £7m to support its full fibre network rollout in Fareham, Hampshire, due to cover 19k premises and with services due to go live by the end of the year. · 7 April – Utility infrastructure firm, Energy Assets is another supplier in a whole slew who have recently applied for Code Powers to build and in Energy Assets case, expand their existing FTTP networks; their ‘Energy Assets Fibre Networks‘ division already works with ISPs (e.g. Grain) and property developers to pre-instal fibre infrastructure within the new build housing market, their Code Powers proposal seeks to expand upon this and act as a wholesale provider · 8 April – Sky News reports that TalkTalk weigh up £3bn sale as the budget ISP has been reportedly approached by takeover suitors such as Vodafone and Sky · 8 April – Giganet, announce construction is underway of its full fibre network in Fordingbridge, Hampshire, which when completed by end 2023 will have passed around 4,500 premises · 11 April – Rural full fibre provider, RunFibre, announce that it will pass 3500 premises across rural parts of South Gloucester by March 2023 · 11 April – Country Connect announce they have passed 2750 premises in South Wales since their full fibre deployment started one year ago · 11 April – Hyperoptic calls for Ofcom to investigate broadband industry mid-contract price hikes · 14 April – Satellite broadband operator, Avanti, has been given a slight reprieve by a new investment deal that slashes its debt from $810m to $260m (£198m) · 14 April – Zen Internet announce a new strategic partnership with Kroll, the leading provider of data, technology and insights related to risk, governance and growth, to enhance online protection for businesses across the UK. · 20 April – Hull-based incumbent, KCOM, announce the appointment of new CEO, Tim Shaw, who is stepping up from his current role as Managing Director of the group’s Wholesale and Networks (W&N) division · 21 April – Connectus Business Solutions and KTSL, an IT solutions firm, announce merger with the new entity having been rebranded as the Connectus Group; Connectus Group expects to deliver revenues of more than £10m in the current financial year ending March 2023
Other key news items throughout the month can be found below.
Policies, Studies, Survey and Ofcom Announcements
Devolved Nations (Northern Ireland, Scotland and Wales) Broadband Announcements
Mobile Broadband Announcements
· Vodafone Puts Ultrafast 5G Mobile Live in 12 New UK Locations · Vodafone UK Relaunches 5G Ready VOXI For Now Social Tariff · Three UK See Record Mobile Data Traffic of 1 Terabits Per Second UPDATE · Giffgaff Freezes All UK Mobile Tariffs Until the End of 2022 · FarrPoint Map 4G Mobile Cover on Scotland’s North Coast 500 Road · First Milestone of 4G Rollout on London Underground Completes · Opensignal Award Best 4G and 5G UK Mobile Networks for Q1 2022
[1] ITS Technology Group citing data source: ‘Ordinance Survey OS Open UPRN’ data set.