Netflix Forecasts Further Strong Growth.

Netflix reported a 35% increase in global streaming revenue in 2016 to 8.3 billion US dollars. It finished the year with 93.8 million members, having added 19 million in 2016 compared with 17.4 million in 2015.

Netflix forecast a 39% rise in streaming revenues to 2.52 billion dollars in the current quarter, together with net member additions of 5.2 million. In the fourth quarter of 2016, streaming revenues rose 41%.

Reed Hastings, CEO of Netflix, said: "We continue to invest in local programming to complement our content offering and as a means to introduce new members to our global library. We are focusing on local content that travels pan-regionally or across multiple territories, such as Japanese anime and Turkish dramas."  source: Netflix statement

Apple's App Store Enjoys Bumper 2016

Apple said developers earned more than 20 billion US dollars from its App Store in 2016, up over 40% from 2015. Since the App Store launched in 2008, developers have earned more than 60 billion dollars, Apple added.

On New Year’s Day 2017, the App Store sold nearly 240 million dollars worth of apps and content. Apple also reported that the App Store’s subscription billings rose 74% in 2016 to 2.7 billion dollars. source: Apple statement

Amazon's Echo Sells Out

Amazon’s Echo, a smart speaker controlled by Amazon’s virtual assistant Alexa, and the smaller Echo Dot are completely sold out on Amazon’s website and won’t become available until after the holidays. Source: Statista

The Echo and Alexa are key elements of Amazon's strategy to sidestep Google's and Apple's control of the smart home market. For more on Amazon's battle with Google and Microsoft for the smart home,  see my recent report for STL Partners.

Most People Still Don't Have Internet Access

Mobile-broadband networks cover 84% of the world's population, yet Internet user penetration stands at just 47.1%, according to the ITU.  "While infrastructure deployment is crucial, high prices and other barriers remain important challenges to getting more people to enter the digital world," the ITU said. Source ITU statement

Global Telecom Capex Sees Uptick

Research firm IHS forecast that worldwide service provider capex will rise 0.7% to 341 billion US dollars in 2016, "mainly propelled by a much-needed wave of investment in wireline broadband—for example, fiber to the X (FTTX)—in Europe. Spending on every type of hardware equipment except wireless and time-division multiplexing (TDM) voice will rise in 2016."

IHS projects that global telecom service revenue will  grow by over a percentage point this year to 1.93 trillion US dollars, after declining 4% in 2015. Source: IHS statement

Vodafone Europe Begins Bounce Back

Vodafone Group said its service revenue rose 2.3% year-on-year on an organic basis in the six months to September 30th. Vittorio Colao, Group CEO, said: "Europe [was] modestly ahead of our expectations - led by Germany and Italy ... Our substantial network investments and ‘more-for-more’ propositions have allowed us to capture opportunities from strong data demand... As Europe’s fastest-growing broadband operator, we are driving rapid uptake of our consumer fixed and TV services while our wholly converged enterprise business continues to outperform its peers.

"Competition in India has increased in the year, reducing revenue growth and profitability. We have responded to this changing competitive environment by strengthening our data and voice commercial offers and by focusing our participation in the recent spectrum auction on acquiring frequencies in the more successful and profitable areas of the country. Overall, we expect to sustain our underlying performance in the second half of the year and remain on track to meet our full-year objectives despite macroeconomic uncertainties." source: Vodafone statement

T-Mobile USA Drives DT Forward

Deutsche Telekom reported a 5.9% year-on-year rise in revenue for the third quarter to 18.1 billion euros. The growth was fuelled by a 18% rise in revenues in the US to 9.2 billion US dollars, as T-Mobile USA added another 1.97 million subscribers in the quarter. In Germany, revenue was flat. source: Deutsche Telekom presentation

Facebook Signals Tougher Times Ahead

Facebook reported a 56% year-on-year increase in revenues for the third quarter to 7 billion US dollars. But the social network warned of slower growth ahead, primarily because it is running short of inventory in which to place adverts (as users will only tolerate so much advertising). "Revenue growth rates will decline in Q4 as we lap a strong fourth quarter in 2015," said Dave Wehner, CFO of Facebook. "Ad load will play a less significant role driving revenue growth after mid-2017. Over the past two years we have averaged about 50% compound revenue growth in advertising. Ad load has been one of the three primary factors fueling  that growth. With a much smaller contribution from this important factor going forward, we expect to see ad revenue growth rates come down meaningfully."

Wehner added that costs will rise: "We anticipate 2017 will be an aggressive investment year. Adding top engineering talent remains one of our key investment priorities as we continue to execute on our 3-, 5- and 10-year roadmap. We will continue to invest in our ability to recruit top technology talent both in the Bay Area and beyond. In addition, we expect to grow capital expenditures substantially as we continue to fund the ongoing data center expansion efforts that we have underway."

Mark Zuckerberg, CEO of Facebook, also flagged an increase in spending on virtual reality content: "And since we believe the next phase of VR is great software experiences, we're investing another $250 million in virtual reality content -- on top of the money that we've already invested." Source: Facebook earnings transcript