Business

Gideon Spanier: Telly addicts are watching closely as ITV plots Britain’s answer to Netflix

Dame Carolyn McCall is set to unveil a SVOD service at its annual results next Wednesday
Matt Frost/ITV/REX
Gideon Spanier
21 February 2019

Netflix has wound up rivals in the TV and film business by claiming it doesn’t see them as a threat. “We compete with, and lose to, Fortnite more than HBO,” it declared at its annual results when it suggested immersive computer games are more serious competition than any subscription TV or online video platform.

“Our focus is not on Disney+ [Disney’s new planned streaming service], Amazon or others, but on how we can improve our experience for our members,” Netflix added.

Reed Hastings, the co-founder of Netflix, was taking a calculated dig because he knows everyone in the media industry is obsessed with how his company is disrupting TV and film on both sides of the Atlantic.

Broadcasters and Hollywood studios have been fretting about Netflix and, to a lesser extent, Amazon Prime Video for years, but it has taken until now for them to mount a counter-offensive.

Disney, AT&T, Comcast and Apple are among those planning to launch subscription video on demand (SVOD) streaming services in the US in the coming months.

Meanwhile, ITV chief executive Dame Carolyn McCall is set to unveil a SVOD service at its annual results next Wednesday. McCall has been talking to the BBC about teaming up to create a “British Netflix”, along the lines of BritBox, their joint venture in the US.

The fact ITV and the BBC might collaborate, with the blessing of regulator Ofcom, is a sign of just how much the global streaming giants have already disrupted British TV and changed viewers’ expectations, with potentially harmful consequences for homegrown content.

Netflix, the world’s biggest SVOD service, is rapidly approaching 150 million subscribers, including an estimated 10 million in the UK, and it has amassed valuable viewing data that informs its programme investments.

Revenue growth has allowed Netflix to borrow money to keep increasing its content budget and it has committed to spend at least $8.6 billion (£6.7 billion) on making and licensing shows this year, four times what the BBC spends on content.

Importantly, Netflix is attracting top talent because of its willingness to push creative boundaries as well as pay handsomely.

Read More

Molly-Mae Hague needed therapy to process moving back in with Tommy Fury

Molly-Mae Hague needed therapy to process moving back in with Tommy Fury

Adolescence star Stephen Graham says recognition ‘nice’ but not his motivation

Adolescence star Stephen Graham says recognition ‘nice’ but not his motivation

New series of Love Island: All Stars begins

New series of Love Island: All Stars begins

Sponsored
The best destinations and activities to book this winter

The best destinations and activities to book this winter

Recent hits include Charlie Brooker’s interactive Eighties London drama, Black Mirror: Bandersnatch, which allows viewers to choose how the plot unfolds and Alfonso Cuaron’s Seventies Mexican film, Roma, which has 10 nominations for next Sunday’s Oscars. New entrants to the SVOD market face daunting challenges: first, investing in streaming is costly because a company must build the technology, acquire programming rights and spend on marketing.

That is a big outlay for a traditional media company, especially if shareholders expect it to keep paying a dividend. Disney last month reported a $1 billion loss on its stake in US service Hulu and other streaming operations. By contrast, Netflix is profitable and, like most tech giants, it doesn’t pay a divi. Another worry for new subscription streaming players is that consumers are not certain to pay for lots of streaming services.

McCall says ITV’s research has found that consumers would be willing to pay for a “British” TV streaming service and there is evidence that many Britons do subscribe to multiple streaming and pay-TV services because they love high-end TV.

However, recent history also suggests there are usually only a few big winners in any online sector.

Ultimately, the reason why streaming has taken off, particularly among teens and twentysomethings, is that the viewer feels in control.

Netflix’s obsession with user experience is good for consumers but is a serious threat to traditional media business models. Viewers are being conditioned to expect no advertising breaks and to watch instantly, rather than wait weeks or even months for a conventional TV series broadcast or cinema release. “We have got to evolve what we do quite quickly,” McCall warns.

Streaming has already prompted Rupert Murdoch to sell his Sky and Fox entertainment assets. More of media’s old order are going to be swept away by the streaming tide.

MORE ABOUT

Itv