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TV streaming services overtake pay TV for first time

19/07/2018

TV streaming services overtake pay TV for first time

18 July 2018

There are now more UK subscriptions to Netflix, Amazon and NOW TV than to traditional' pay TV services

Pay TV revenues decline for first time, after a period of sustained growth

Broadcast TV remains popular, but viewing among 16 to 34-year-olds is moving online

In music, streaming revenues now outstrip physical sales

The number of UK subscriptions to television streaming services like Netflix has overtaken those to traditional pay television for the first time, marking a major shift in the UK's viewing habits.

The amount of revenue generated from pay TV has also fallen for the first time, after a period of sustained growth, new research from Ofcom finds.[1]

Spending by the BBC, ITV, Channel 4 and Channel 5, on new UK-made television programmes fell to a 20-year low.[2] At the same time, people are spending less time watching television: average daily broadcast viewing on the television set fell by nine minutes in 2017 and is down 38 minutes since 2012.

The findings are part of Ofcom's Media Nations report, a comprehensive study of major trends in the UK's television, radio and audio sectors, published today.[3]

The report highlights a competitive shift within the UK television industry, driven by the rise of the major global internet companies and the changing habits and preferences of UK audiences. With more choice for viewers than ever before, UK broadcasters are competing for viewers in an increasingly fragmented landscape.

Key findings include:

Streaming overtakes established pay TV. The total number of UK subscriptions to the three most popular online streaming services Netflix, Amazon Prime and Sky's Now TV reached 15.4 million[4] in Q1 2018, overtaking, for the first time, the number of pay TV subscriptions, at 15.1 million; and

Pay TV revenue declines for first time Following a period of sustained growth, the UK's pay TV providers saw a 2.7% decrease in total revenue last year to 6.4bn.[5] In contrast, the increasing number of streaming subscriptions[6] contributed to a 25% growth in online audio-visual revenues, to 2.3bn in 2017. Meanwhile, television advertising income fell by 7%, to 3.9bn;

PSB spending down. The BBC, ITV Channel 4 and Channel 5's 2.5bn combined network spending on original UK-made programmes in 2017 represents a record low and is 1bn (28%) less than the 2004 peak of 3.4bn. An increase in funding from third parties towards the cost of programme-making (from 147m in 2008 to 338m in 2017 across the BBC, Channel 4 and Channel 5) has partly helped to mitigate this decline.[7]

Broadcast TV viewing declines The amount of time spent watching broadcast television on the TV set has continued to decline and, in 2017, stood at an average of 3 hours 22 minutes a day, down nine minutes (4.2%) on 2016, and 38 minutes (15.7%) since 2012. Among children and viewers aged 16 to 34, declines were steeper, leading to the over-65s watching four times as much broadcast television as children in 2017.[8]

As viewing habits shift online. Total daily viewing time across all devices stands at 5 hours one minute, of which two-thirds (three hours 33 minutes or 71%) was to broadcast content, and 1 hour 28 minutes to non-broadcast content. However, among 16 to 34-year-olds, total daily viewing time in 2017 was 4 hours 48 minutes, of which less than half (two hours 11 minutes or 46%) was to broadcast content, while just under an hour per day was spent watching content on YouTube.

Sharon White, Ofcom's Chief Executive, said: Today's research finds that what we watch and how we watch it are changing rapidly, which has profound implications for UK television.

We have seen a decline in revenues for pay TV, a fall in spending on new programmes by our public service broadcasters, and the growth of global video streaming giants. These challenges cannot be underestimated.

But UK broadcasters have a history of adapting to change. By making the best British programmes and working together to reach people who are turning away from TV, our broadcasters can compete in the digital age.

Television and online video revenues in 2017

Average minutes of daily broadcast TV viewing on the TV set, by age

How people are watching TVThe Media Nations report also shows how increased take-up of superfast broadband and connected televisions is driving changes in how people watch TV.

Across all devices, the UK's total television and audio-visual daily viewing in 2017 reached five hours and one minute.

The majority of this daily viewing (three hours 33 minutes or 71%) was to broadcast television, with the remainder (one hour 28 minutes or 29%) to non-broadcast content, such as YouTube and subscription on-demand services, such as Netflix and Amazon Prime Video.

Younger viewers (age 16-34), however, watched more non-broadcast than broadcast content an average of 2 hours 37 minutes a day (54%) across all devices, compared with 2 hours 11 minutes (46%) respectively.

Total audiovisual viewing time spent, all individuals vs. 16-34s[9]

Risks to public service broadcasting, but satisfaction remains highViewers' confidence in public service broadcasting remains high. Of those people who watch channels from the public service broadcasters, three-quarters (75%) say they are satisfied, and 84% of people considered trusted news to be the most important feature of their output.

But the report also underlines the challenges facing the UK's public service broadcasters from changing technology, audience fragmentation and global competition.

It reinforces Ofcom's call, earlier this year, for UK broadcasters to collaborate to compete to match online competitors growing scale. That means UK broadcasters joining forces with each other, or with third parties, to share i
LINK: https://www.ofcom.org.uk/__search/s/redirect?collection=web&url=https:...
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