Britbox – the British Netflix?

Date posted: 3 Apr 2019

Posted by: Smithfield

Post category: Blog

In the last week or so, a nod to the potential future of UK broadcasting industry has emerged about the launch of subscription service Britbox.  This has been launched as a partnership created by the BBC and ITV to be “The Home of British Creativity” and many commentators immediately made comparisons to Netflix and how these traditional broadcasters are now looking to a subscription service to be their future revenue generator.

This week sees additional speculation that Channel 4 may join in too, with CEO Alex Mahon confirming their interest in the venture.  This news came just a week after Channel 4 launched their own ad-free subscription service within the All4 product.  And we already have ad-free subscription services from the likes of Amazon and Netflix and more arriving from Disney and Apple.

So clearly, subscriptions are being seen as the future of TV revenue in the UK.  Of course, Sky have always generated more revenue from their subscription than they do from advertising, and now the other major broadcasters are looking to this trend.

So what does this mean for the TV ad industry?  Well, we know it’s big and takes around £5bn from advertisers every year who are keen to put their brands alongside the right audiences and content.  Taking viewers away from “linear” TV will impact the TV industry’s ability to deliver the scale of audiences that the advertisers demand.  But TV pricing is set by basic economics – supply of ratings and demand of those ratings by advertisers.  If the supply drops and the demand remains the same, then the price will rise.  So £5bn is still spent in the TV market and ITV, C4 and Sky still take the same revenues – so can there be a downside to the UK broadcasters’ ad revenue?

This is where it gets tricky, as we don’t have a very clear crystal ball in which to gaze and assess the future.  What will be the drop-in audience that won’t be using “linear” TV?  Will it be uniform across all broadcasters?  What does this mean for the big stations where the water cooler moments are created?  And the small stations which provide niche content?

The success of Britbox will be reliant on what content will be put on it. Will ITV put the latest episodes of Coronation Street and other crown jewels of their schedule on Britbox? This then raises the question of whether the content will be attractive enough to make every household pay £60 a year for it on top off all the other subscriptions households have signed up for.

Lots of unknowns, but one thing is for sure, the TV industry is looking to what the future of audio-visual content could be. We, at Smithfield, are keeping an eye on this and will be looking as Britbox (and other subscription services) develops what impact this will have on advertisers and the consumer.

This is just one of the many discussions we are having at Smithfield. We are always looking at what is happening across the industry and the impact this could have on our clients. Get in touch today to see how our approach and thinking can help you achieve the results you need.

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