Ofcom’s second annual Media Nations report has just been published and its most striking finding is that while the major global streaming services, such as Netflix and Amazon Prime, are taking an increasingly bigger slice of UK viewing time, the UK’s public service broadcasters (PSBs) remain the prime providers of the hugely sought after original local programming.
The report states: “The PSBs retain a vital and unique place in meeting the needs of UK audiences, including by offering content made in the UK for UK audiences to a much greater extent than any other provider.”
PSBs delivered over 32,000 hours of UK-made original content in 2018, while only 221 hours of original subscription Video on Demand (SVOD) content was made in the UK. The bulk of SVOD content is U.S.-made and targeted at a mass global audience.
Despite the sustained demand for local original content, however, the PSBs are not producing anywhere near enough of it to stem the overall decline in broadcast TV viewing. To put this into perspective, the report states: “Although ITV2’s Love Island gained large audiences in June and July 2018, about 14 Love Islands would be required to counteract the year-on-year drop in broadcast viewing.”
And as Richard Broughton, Research Director at Ampere Analysis, points out, the major international players are producing local content, and although it is not at the same volumes as local broadcasters, UK content is looking increasingly attractive for them.
“Just 48% of Netflix’s upcoming Originals slate is U.S.-origin,” Broughton reports. “However, the 52% which is internationally-originated is being spread thinly across numerous markets, so it is really only a handful of territories in which the major OTT players feature among the top commissioners. Slightly unfortunately for UK broadcasters, although perhaps not UK producers, UK content travels well internationally, meaning that the UK takes a disproportionate amount of OTT commissioning focus, which means that there is more new local OTT-originated programming in the UK than there is in most non-U.S. markets.”
Broadcast production spend drops
Investment in UK-made original content fell 5% or £143 million in 2018 compared to 2016. This is explained by a fall in BBC licence fee revenues and a drop in advertising revenues for commercial PSBs. But UK PSBs are increasingly looking to co-productions and third-party funding for high-end drama, as well as collaborations with global SVOD players. Third parties invested a record £455 million in PSB content in 2018.
And UK broadcasters are ahead of most other markets when it comes to investing in new content and staying competitive in the international marketplace, says Broughton. “The BBC and Channel 4 are commissioning more brand new shows than other European PSBs. In fact, the BBC is commissioning more brand new titles than any other broadcaster worldwide – although it should be noted that many of these are one-off documentaries, as opposed to long expensive scripted series. The BBC remains marginally ahead of other broadcasters on new scripted series as well.”
The schedule is an added challenge to PSBs
Unlike dedicated streaming services, PSBs are heavily reliant on the TV schedule. “Subscription OTT players need sufficient content to keep people subscribing, which leads to different economics in terms of commissioning behaviour and spending,” explains Broughton.
“OTT players can arguably forgo spending on ‘daytime TV’ shows, which means that all of the revenue can be diverted into funding tentpole titles to keep people subscribing.
Broughton says UK broadcasters are not under-investing but are faced with unfavourable economics imposed by the broadcast system and a UK audience that is simply smaller and less valuable than the U.S. or global audiences catered for by the major U.S. players. “International diversification and/or partnerships is absolutely essential for European PSBs,” he declares.