Last year saw UK broadcasters achieve their highest revenues in five years, thanks to post-pandemic TV advertising resurgence, according to Ofcom’s Media Nations 2022 report.
As lockdown restrictions lifted in 2021, live TV viewing fell by 13 percent but TV advertising returned to growth after six consecutive years of contraction. Ofcom found that ITV, Channel 4 and Channel 5 collectively generated £2.4 billion as a result. The regulator warned that anticipated economic slowdown could stymie future growth.
Meanwhile SVOD revenues grew by 27 percent in 2021, almost matching 2020’s 28 percent growth at the start of the pandemic. In Q2 2022, Netflix and Disney+ were used by 67 percent of UK households, down 1 percent from Q1. Price rises and high subscriber intake brought UK SVOD revenues to £2.7 billion, according to Ofcom.
The report additionally found that 32 percent of UK teens and adults watch short-form video every day, rising to 69 percent among 15–17-year-olds. The most popular social video platform is YouTube, used by 70 percent of viewers, followed by Facebook at 47 percent. Meanwhile TikTok reaches 36 percent of adult internet users, again jumping to 67 percent of 15–24-year-olds.
Cause for concern
Ofcom also revealed that 40 percent of online adults and teens go to SVOD platforms first when looking for something to watch, versus 37 percent who start with TV channels. Julian Aquilina, Senior TV Analyst at Enders Analysis, points out that younger people could end up watching broadcaster-produced content without realising it. “If they’re not in the habit of going to the BBC or ITV as their first port of call, but instead they’re defaulting to Netflix or YouTube and seeing what is being recommended, then that’s a cause of concern for broadcasters because people aren’t going to be in the habit of going to them first.”
As a result of these online trends, broadcasters’ viewing share (both linear and on-demand) fell to 59 percent in 2021, down from 67 percent in 2019. The report added that TV viewing has decreased much faster for younger people than for older people. However the decline was partially offset by the popularity of the public service broadcasters’ (PSB) BVOD services, with time spent watching BBC iPlayer, ITV Hub and All 4 increasing by an average of three minutes per person per day in 2021.
Those free services pose a challenge for subscriber growth in the SVOD sector, the report suggested. “The cost-of-living crisis is making customer retention more challenging,” said Ofcom. This is particularly true for “less-established” services in the UK, such as Apple TV+, Discovery+ and Paramount+, compared to higher-profile platforms from Netflix and Disney.
“Consumers will race to the service with the latest content and then hit the pause button,” comments Alice Enders, Head of Research at Enders Analysis. “The ad-supported services of PSBs are more robust in this environment, noting that the content they offer is of course distinct and low-budget and is not a substitute for say the forthcoming Lord of the Rings series from Amazon Prime Video that cost $1 billion!” She adds that advertising is reliant on an economy currently experiencing a downturn, and we should therefore “not expect TV advertising including BVOD to buck the trend.”
Room for growth
“Growth in viewing of PSB on-demand services has not been enough to fully offset the larger decline in viewing of linear broadcast PSB channels,” the regulator confirmed. The report predicted that the PSBs will continue to evolve their streaming services to offset declining TV viewing – for example ITVX will combine ITV Hub, ITV Hub+ and BritBox into a single service.
“In a departure from its traditional approach, ITV plans to adopt a digital-first content strategy where much of its new content will be shown first on ITVX, before being broadcast, potentially months later, on ITV linear broadcast channels,” stated the report. The watchdog noted ITV’s recently announced content partnership deals with Twitter and Snapchat, enabling the broadcaster to generate short-form FIFA World Cup, Rugby World Cup and Love Island content for social platforms.
The Ofcom survey also highlighted the elements UK viewers value in PSB content. Trusted and accurate news was deemed most important (15 percent), followed by ‘programmes that help me understand what is going on in the world’ (11 percent) and ‘a wide range of different types of programmes’ (11 percent). News was considered more valuable among older audiences, while younger viewers placed greater value in seeing relatability and diversity on screen.
Staying alive
That said, SVOD services were also found to provide content generally underserved in the UK broadcasting landscape, such as comedy, specialist factual and children’s programming. “These genres can have limited audiences on domestic and ad-supported services, making global services, with subscription funding, more viable places to produce and distribute them,” said Ofcom.
“You could also argue that the same has been the case historically, that certain genres are more viable on the broadcast platforms,” adds Aquilina. “News and sport, for example, these are areas where it’s not commercially viable for the streaming platforms to do those sorts of programming.”
This makes live event TV the key differentiator in a field increasingly dominated by streaming services. “There are certain genres which are going to lend themselves better to the live broadcast TV experience, and that will continue into the future,” continues Aquilina. “So yes, the broadcasters are probably going to lose more audiences over time, but there’s always going to be a base level which people need to go to broadcast TV for their viewing.”
