Irreversible Shifts in Tech and Behavior Are Reshaping UK TV
“The centrality of technology” is a major contributory factor in the decline of broadcast, particularly British public service broadcasters, who are struggling to keep pace with the internationalisation of streaming and irreversible, rapid changes in media consumption, BBC News’ Analysis Editor Ros Atkins told execs on 21st August at the Edinburgh TV Festival.
“In advertising’s move to digital in TV’s globalisation—in the shift in consumption—we see a major shift–the centrality of technology,” Atkins said in the opening keynote. Of course, technology has always mattered, but now it’s a dominant factor across the industry—from streaming platforms to production to ads—and that requires investment.
This year, the BBC is spending US$90 million on online and TV development. But Netflix has spent $1.4 billion on technology in the first half of this year alone.
“UK streamers can point to rising user numbers, rising viewing hours, to new and improved products. But a truth remains,” he said. “The need for ever more complex technology is increasing exponentially—not least because of AI. And the biggest global companies—with their vast resources—inevitably have an advantage.”
PSBs, the Shift to Streaming, and Broadcast in Decline
Shifts of this scale would be a lot for any industry to navigate. They ask fundamental questions about how the UK TV industry works, and what it wants to be. And right in the middle of those calculations is public service broadcasting (PSB). ITV has invested millions in ITVX. Channel 4 is accelerating its shift to streaming.
Those broadcasters plus the BBC and Channel 5 have launched new free connected TV streaming service, Freely. But it won’t be enough to arrest let alone reverse decline. In 2023, the UK saw the steepest annual decline in broadcast TV audiences since records began.
Leading commercial broadcaster ITV declared the worst downturn in ad revenue in 15 years. This was blamed variously on a post-pandemic drop in viewing, on the writer’s and actor’s strike in the US, on rising costs—affecting production and consumer spending and a UK economy that was struggling to grow.
“No doubt—these were significant factors,” said Atkins, “And the industry was keen to offer reassurance.”
The CEO of marketing body Thinkbox predicted, “Once the economic pressures start to ease, TV will bounce back very quickly.”
Will Ad Revenue Bounce Back?
This year, Julian Bellamy, managing director, ITV Studios promised, “the ad market will come back, there’s always a cyclical nature to it.” “Ad markets are sometimes cyclical,” Atkins noted.
“Ad revenue has picked up this year. But the digital revolution we’re living through has issued the media with plenty of one-way tickets. Not everything comes back to where it was.”
Atkins identified the shift in TV and video consumption quoting stats that last year in the UK broadcast TV channels accounted for 62% of long-form programmes—a figure that’s projected to more than halve to 28% by 2035.
The BBC’s Director General Tim Davie acknowledges, “A switch-off of broadcast will and should happen over time.”
YouTube and TikTok Rising
VOD streaming services and video sharing platforms like YouTube and TikTok are, of course, taking its place. Together, they already make up at least 30% of viewing minutes across all devices in the UK. “That is certain to go up,” Atkins said.
Nor is everything growing at the same speed. In 2023, UK viewing hours for Netflix were flat. YouTube was up 32%. The Alphabet-owned streamer is closing in on Netflix, helped by greater access to YouTube via Connected TVs.
Former Disney exec Kevin Mayer described YouTube as “the 800-pound gorilla in this space,” in part, because it’s a rival platform for programmes, but also because YouTube is part of a surge in content creators and a surge in short-form video.
Media analyst Omar Oakes argues, “All media is being threatened by the ubiquity of short-form.”
Globalisation and Localisation
The shift in consumption connects directly to the globalisation of TV, which some TV execs in the UK feel threatens the cultural integrity of the Britain despite streamers like Netflix commissioning more content locally. “The merits of globalisation are debated but what’s certain is that it’s happened,” said Atkins. “To understand the consequences of this—and of the shift in consumption—I factored in a third shift… advertising’s digital transformation.”
With advertising, there are long-term trends that pose challenges for broadcasters, he said. The amount of money spent by advertisers in the UK in 2023 was over £36 billion. But of that total, online advertising accounts for over three-quarters, the highest percentage it’s ever been. TV advertising down nearly 9 percentage points in 12 months.
“Across the media, the biggest beasts of the tech world with their sophisticated ad technology are taking the bulk of the ad market,” said Atkins. “That’s the context as business models in the TV industry are reshaped.”
Streaming dominated by the international streamers seem an unstoppable force. Viewing hours on streaming platforms compiled by measurement body BARB for this year in the UK show that Netflix is over twice as big (34%) as anyone else. BBC is next (17%), then Disney+ (14%) and Amazon Prime (11%), with ITV at 7% and Channel 4 only at 4%.
BBC Director iPlayer and Channels Dan McGolpin pointed out that when viewing of the BBC’s linear channels, not just to iPlayer, is added in then the broadcaster still dominates UK TV viewing habits. But everyone seemed aware that these numbers are not sustainable outside of the largest national events like sport or royal occasions.
“In the streaming marketwhere we know viewers are heading—where big tech is competing for ad revenue [and] expensive tech development is crucial—the PSBs are growing, but the majority of viewing isn’t with them,” said Atkins. “It’s with the global players. If that continues, there are a range of commercial and cultural consequences that may follow.”
Among those consequences are the culling of many of the hundreds of independent UK TV production companies and resultant loss of jobs. Also on the block—not now but down the line—is the axing or merger of one or more of the UK’s five PSBs. The combination of PSB apps in Freely (and also satellite delivered FTA service Freeview) is a step towards that possibility.
“Perhaps we do need to ask a comfortable question: Is it viable to have this many public service broadcasters in the median term? The digital revolution in TV and video isn’t coming. For better or worse, it’s here. There’s no going back.”
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