It is traditional to make predictions at this time of year.

But as all parents of young children know, it is almost impossible to do anything that involves serious thinking until they’re back at school.

So here are a few things that I learned in 2018, which I believe are worth holding in your media minds as we adopt the brace position in preparation for the madness of 2019.

YouTube and Netflix will define the next generation's relationships with video

The BBC defined my relationship with video as I grew up.  

For Elodie, our 3-year-old daughter, through to my teenage godchildren, it is emphatically YouTube and Netflix that play this role.

When 12-15s are asked what they ‘often watch’, YouTube leaves the rest for dead.

The ‘What couldn’t you do without?’ question is harder and more brutal still.

48% say YouTube; 19% say Netflix. The BBC and Disney Channel are equal 3rd with just 6%.

Global IP delivery beats Satellite

When Murdoch sells, it is clear that there is a fundamental shift taking place.

Murdoch’s sale of Sky was a drawn-out acceptance that Internet Protocol television is beginning to elbow domestic, satellite services to one side.

IPTV is global and comes with global revenues and global power. It is beginning to eat into the soft under-belly of domestically focused satellite pay-TV services and will keep going. Sky and Virgin will fight hard but the chip-chip is beginning as packages are unbundled and the balance between subscription volumes and Average Revenue Per User becomes ever harder to sustain.

So why was Sky valued so highly? Corporate egos and late cycle pressures came together to inflate the price to bubble proportions. How big will the eventual write down of value be?

Facebook powers on

It has been a terrible year for Facebook.

A platform used for political manipulation on both sides of the Atlantic; gross misuse of personal data and bodged attempts to cover it up; Zuckerberg hauled in front of the Senate; a management team caught in the headlights and facing regulation.

Operating margins have fallen from around 50% to 42%.

But for the non-FAANG media world, what matters is how much more of the advertising pie Facebook will take. In this area Facebook’s progress remains relentless. The pain for traditional media owners does not abate.

Revenue per user is up 30% in the US and 29% in Europe. Total revenues are up 33%.

Daily active users are up 9% year on year globally even if they are static in the US and Europe.

These numbers are just for Facebook. Instagram now has around 1.2 billion users, is the fastest growing social platform and has far greater revenue growth potential as it becomes the central brand search engine for the younger generation. The Instagram cash hoover is still on a very low setting.

Regulation will happen. It will take ages

The mood has changed in the debate about  regulation of social media.

In Select Committees, the Lords and even in government, there is a desire to regulate.

But nobody has any idea how.

Regulating television is easy. It has clear, defined boundaries. The volume is relatively small. It doesn’t move that quickly. Nobody dies.

Regulating social media is a monster of a task that is a million times more complex. Can AI do the job? Perhaps it can help but the subtleties of content regulation will require some remarkable minds to find a vaguely workable solution.

Regulation is on its way. It will take 5 or 10 years before an approach that is both technically possible and politically supportable emerges. Meanwhile, the tech giants can drive onwards regardless.

Don’t rely on advertising

As the co-founder of an advertising-funded media business, I write this with deep sadness.

The end of 2018 was also the end of ShortList magazine, an advertising funded brand, for which I was part of the launch team. Pints were downed. Tears were shed.

It is not just traditional media companies who are heavily reliant on advertising. So too are the big buying agency groups.

Unless your company is called Facebook, Google or Amazon, you can no longer be overly reliant upon advertising. The brutal structural trend towards personalised, immediate-feedback advertising is relentless. It will not stop.

Business model reinvention and lots of brutal cost cutting must now be a permanent state of being for the pressurised traditional media businesses and buying agency groups most exposed. Unfortunately most are focused on the cost cutting and not so good at the innovation.  

It’s Brave Strategy Time

Platforms own the consumer more effectively than media companies can. The gap in consumer insight and targeting power between the platforms and media companies grows every day.  

Global scale is critical in an increasing number of media sectors as domestic or regional advantages are increasingly undermined.

'Talent' becomes ever more powerful and independent with the potential to build its own routes to the consumer be that talent Taylor Swift, sports clubs or other 'content brands' with global followings.

So domestic UK media companies need to be braver in their strategies than ever before.

There was just one piece of big, brave UK strategy in 2018.

Global Radio, led by Stephen Miron, showed the way. Buying 3 outdoor advertising companies in less than a month to become, overnight, the second largest by market share after JC Decaux was a remarkable move. It gives Global significant power in two defensible, domestic advertising market segments - radio and outdoor. It came at a high price but it is a clear, brave strategy that we can all understand.  

Surely there must be some fresh, radical, global ambition from a UK media company in 2019. Will the BBC stop feeling sorry for itself and please step up to the plate?

Other volunteers also welcomed.

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About Tim Ewington

Co-founder of Shortlist Media. Previously co-founder of media strategy consultancy, Human Capital. Still innovating, consulting and investing.
  • London