If TV’s spending splurge is over, nobody informed ITV. Whereas broadcasters are anticipated to spend 3 p.c much less on programming this yr, ITV plans to pour £160 million into content material for its new streaming service ITVX – and intends to take care of that stage of annual funding via 2026.
Since ITVX launched in December, the broadcaster has reported a 55 p.c YoY rise in streaming hours, alongside a 65 p.c enhance in on-line customers. And because the unseasonal World Cup was answerable for round half of these streams, ITV hopes its hefty content material funding can maintain these viewers on aspect.
Traders are much less optimistic, questioning the knowledge of such a spending dedication in a interval of slowdown for the TV promoting sector. In its final earnings report (Q3 2022), ITV’s advert revenues have been down 14 p.c YoY, and Citi expects an extra 5 p.c fall this yr. Regardless of receiving a bump from the streaming outcomes, ITV’s share worth has halved over the course of CEO Carolyn McCall’s five-year tenure.
“Whereas buyers are already alarmed by the group’s plans to extend content material spend coupled with the adverse traits in linear TV promoting income, the crowded nature of the streaming market implies that platforms with the next content material spend are likely to see increased ranges of engagement,” feedback Neil Anderson, Analyst at Ampere Evaluation.
Islands within the Stream
That is the place ITVX goals to outperform its predecessor ITV Hub, whose 1,500 hours of content material have been dwarfed by the likes of All 4 (15,000 hours) and BBC iPlayer (14,200 hours) – to not point out its historical past of crashing throughout key moments in worldwide soccer matches or necessary arguments on Love Island. And whereas ITVX is just not proof against technical glitches, the brand new service appeared to carry out effectively via the World Cup after some teething issues.
As for the content material aspect, ITVX is 10 instances the dimensions of ITV Hub, taking the BVOD service from a pure catch-up proposition to a vacation spot to find new content material. However regardless of ITVX rivalling All 4 by way of sheer programming quantity, the Channel 4 streamer has had eight years to ascertain itself, leaving ITVX with a catch-up proposition of its personal.
ITV’s streaming MD Rufus Radcliffe addressed this level in December, telling the FT: “I don’t recognise that we’re late … When it comes to viewing behaviour, and the place it’s going, this appears like the proper time to take this to the following stage.” Certainly, an Ofcom report final yr discovered 90 p.c of youthful viewers bypassing broadcast TV and heading straight to streaming providers – however ITV Hub was not essentially one among them, trailing each All 4 and iPlayer on 16-34 audiences, in keeping with Kantar.
A part of that funding then goals to make ITVX an even bigger draw for younger viewers. In September, ITV media and leisure MD Kevin Lygo known as the brand new service a possibility to fee “area of interest exhibits”, unconfined by the “all issues to all folks” mandate of its flagship channel. He in contrast the providing to ITV2, the place Love Island attracts over a million younger viewers. “I’m unsure it will be acceptable for ITV, which has a public remit and will scare folks,” Lygo added.
However that danger might lengthen to ITVX, argues Ampere’s Anderson: “Older viewers could possibly be alienated in the event that they really feel that ITV has taken its eye off programming for its most dependable viewers in pursuit of youthful audiences which are more and more abandoning conventional broadcast.”
It’s price noting although that ITVX is just not explicitly concentrating on younger audiences, and isn’t taking content material spend from linear budgets. It can additionally deliver its streaming originals to the published channels 6-9 months after their launch on ITVX.
The Chase is on
With regards to streaming audiences nevertheless, ITVX is just not merely competing with the UK broadcasters, however world streamers equivalent to Netflix – which the Ofcom report highlighted because the go-to vacation spot for younger adults, and expects to spend $17 billion on content material this yr.
That stated, Ampere forecasts the streaming large to lose an extra 200,000 UK subscribers in 2023, as spending-conscious shoppers flip to free providers. “ITV might be hoping that its free ad-funded platform will resonate with viewers at a time the place many are compelled to cancel subscriptions as a consequence of cost-of-living pressures,” says Anderson.
In the meantime BARB figures recommend that Netflix is just not presently penetrating UK viewing on the charge SVOD evangelists might have anticipated. ITV captures virtually 15 p.c of month-to-month viewing, in contrast with 9 p.c for Netflix, sustaining the broadcaster’s edge on the subject of promoting attain. And with the big content material providing and concentrating on choices accessible, ITVX “has additionally landed rather well with advertisers,” ITV’s McCall stated in a press release, although precise numbers are undisclosed till the corporate’s monetary leads to March.
In November the industrial broadcaster additionally launched a retail media product known as Matchmaker, with Tesco’s knowledge agency Dunnhumby and Boots Media Group signed up as launch companions. ITV stated that advertisers utilizing its programmatic platform Planet V can goal class shopper audiences watching content material on ITVX, doubtlessly unlocking worth from the service’s enriched consumer knowledge.
“Advertisers might have better alternatives to entry extra targetable BVOD audiences if ITV can considerably enhance the depth of engagement achieved on ITV Hub and appeal to harder-to-reach youthful audiences to ITVX,” says Anderson.
The addition of 20 FAST (free ad-supported streaming TV) channels, together with no less than two devoted to Love Island, might present advertisers with extra entry to these youthful audiences. Presently together with The Chase and Hell’s Kitchen, these 24-hour channels could be dialled up and down in keeping with consumption and seasonality, for instance the World Cup Classics channel that ran through the event.
“ITV’s heritage in daytime tv means they’re effectively positioned to launch FAST channels – providing a lean-back tailor-made linear expertise with a programmed line-up of content material,” notes Anderson. “It could possibly be a great way of compacting extra promoting income out of a big library of content material.”