Less than half of 16-24 year olds in the UK watch broadcast TV in an average week, according to the latest Media Nations report from Ofcom. The study reveals a “stark generational divide” between the younger demographic and older audiences, with broadcast TV continuing to reach UK viewers aged 45-54 (84 percent) and 65+ (95 percent).
Overall, broadcast TV viewing fell by 4 percent in 2023, but still reaches 75 percent of the UK. Max Signorelli, Consumer Research Lead, Media & Entertainment at Omdia, notes that live TV remains “the largest single category” for people aged 35-44, and still a major channel for 23-34s. “These two age groups are among the most engaged with media content generally and are hence particularly valuable consumers for all media owners and services,” he says.
At the same time, free ad-supported streaming TV (FAST) channels continue to profilerate, with around 650 FAST channels now available in the UK. However, Ofcom said the model remains “commercially unproven”, as their UK user bases remain small. In Ofcom’s early-2024 VoD Survey, just 3-4 percent of respondents had used FAST services in the past three months. The exception was Amazon’s Freevee, which 11 percent claimed to have used, “probably benefiting from its prominence on the Amazon Prime Video user interface.”
The device of choice
Meanwhile YouTube continues to gain traction on the TV screen, which accounted for 34 percent of YouTube viewing in 2023. Video-sharing platforms (VSPs) such as YouTube and TikTok are becoming an increasingly important part of younger people’s viewing schedules, growing to 46 percent of total in-home video time for 16-24 year olds.
“Gen Z and Alpha are used to swiping and streaming, not flipping through broadcast TV channels,” said Ian Macrae, Director of Market Intelligence at Ofcom. “They crave the flexibility, immediacy and choice that on-demand services offer, spending over three hours a day watching video, but only 20 minutes of live TV. It’s no surprise that the traditional TV is fast becoming a device of choice to watch YouTube.”
As a result, social video is growing its contribution to UK ad revenues. Ad spend on YouTube, TikTok and Instagram reached £900 million in 2023, up 20 percent YoY. However, the report notes “only some of this spend competes for TV budgets,” as social video spending tends to come from smaller advertisers who do not spend on TV. That said, the rise of YouTube on connected TV positions the company to compete more directly with broadcaster’s streaming (BVOD) services, such as ITVX.
“The primary TV set being the media hub of the home is nothing new, but the increase in viewing time for services such as YouTube on said device is indicative of the wider market trend toward connected TV viewing experiences,” comments Omdia’s Max Signorelli. “Better monetising these users will be crucial in a highly competitive market, with inputs from the video services, both paid and ad-supported, as well as the device manufacturers.”
While BVOD viewing is on the rise (averaging 20 minutes per day), it still trails SVOD services (38 minutes) and VSPs (49 minutes). And though that BVOD growth contributed strong ad revenues for commercial broadcasters last year, Ofcom notes this was not enough to offset revenue declines amid a period of economic downturn.
Dawn of the ad tier
On the SVOD front, subscription numbers have plateaued in the UK, levelling out at 68 percent of households. Netflix remains the most-watched SVOD service at 21 minutes per day, taking more than half of all SVOD viewing. The streaming giant also accounted for eight of the top ten SVOD titles in 2023, according to Barb, with Chicken Run: Dawn of the Nugget taking the top spot.
The study also identifies ad-supported tiers as “the next phase of market growth” for SVOD companies, noting that 13 percent of Netflix households in the UK were on the ad tier in Q1 2024. “The scale of ad-tier take-up within the SVOD subscription mix over the long term is difficult to project at this stage,” said the report. “If it is substantial, ad-supported SVOD could pose significant competition to commercial BVOD in the VOD advertising market.”
Omdia’s Max Signorelli agrees that ad-supported tiers are gearing up for future growth in the SVOD market. “Although penetration and subscriber growth for SVOD is slowing down, the revenue they generate continues to grow healthily,” he says. “A greater variety of services and gradual price increases has driven the market lately, but new advertising-supported tiers will be the next desired revenue driver for 2024 onwards.”
