Market Insight

UK broadcasters unite to compete with Netflix

February 28, 2019  | Subscribers Only

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The BBC and ITV have confirmed plans to jointly launch a paid-for streaming service in the UK by the end of 2019. The service will be called BritBox and will offer mainly archive BBC and ITV shows alongside with original commissions made especially for the new service.

No details on pricing and size of catalogue have been announced yet.

A BritBox service is already available in the US and Canada, where it is reported to have 500,000 customers who have access to over 4,600 episodes of UK programming provided by BBC and ITV.

The BritBox joint venture is the latest of several online co-operative ventures launched by European broadcasters to respond to the phenomenal success of Netflix: RTVE, Atresmedia and Mediaset’s LovesTV in Spain, ProSieben.Sat1 and Discovery’s 7TV in Germany, and the TF1, France TV and M6 venture Salto In France.

Our analysis

BritBox is set to arrive seven years after the launch of Netflix in the UK and ten years after project Kangaroo, a planned online venture backed by the BBC, ITV and other broadcasters, was blocked by the UK competition regulator. Positioned as a niche proposition, BritBox will not be able, nor is it willing to, compete with the likes of Netflix, Amazon or Sky’s Now TV. BritBox will be pitched as a complementary service for people who already subscribe to other online video services.

As with many broadcaster-backed online ventures, BritBox is not so much a brand new service as a reworking of existing ones. ITV is already operating its premium service, ITV Hub+, launched in December 2016, and offering ad-free access to six live channels and on demand programming for £3.99 ($5.30) a month. The BBC tried and failed to launch an OTT service, the BBC Store, which offered digital purchases of BBC library content. The service was launched in late 2015 but shut down two years later, citing growing demand for subscription services as a reason for its lack of success.

The risk of consumer confusion is obvious. ITV will likely to have to close its Hub+ service or merge it into BritBox, keeping the ad-supported ITV Hub as a separate service, much as the BBC is obliged to make the iPlayer available to all TV licence payers in the UK.

The main differentiating factor between free-to-view and premium propositions is the content that will be available through BritBox. BritBox is planning to build its library on archive series like Victoria, Broadchurch and Les Miserables, as well as exclusive content commissioned specifically for the service. ITV has pledged to invest £25 million this year and another £40 million in 2020.

The BBC and ITV are pledging to offer ‘the biggest collection of British content available on any streaming service’, and cited research carried out for ITV that 43% of all online homes would be interested in subscribing to a new SVoD service featuring British content, a percentage increasing to 50% in homes with a Netflix subscription. Some content may have to be pulled from Amazon and Netflix: the latter, for example, is currently offering BBC series Luther, Line of Duty and Life on Earth, and ITV series Love Island and Prime Suspect.

The question will, however, not be whether the two partners have enough content to fill BritBox, but whether they will earn enough from subscription to compensate for the loss of licensing revenue. Also, will the streaming platforms continue to co-produce series like Bodyguard, Dracula and Informer if they are no longer able to secure UK streaming rights? On the BBC side, what ramifications will BritBox have for UKTV, its joint venture with Discovery? BBC library series are an important element of UKTV, which is the largest pay TV channel service in the UK after Sky.

BritBox must strike the right ratio between price and content. ITV Hub+ is priced at £3.99 and it managed to attract around 265,000 subscribers by the end of 2018, according to ITV. It would also be beneficial for a new service to launch on an existing platform, leveraging its brand and customer base. BritBox might have ITV and BBC online video platforms adjacent to benefit from an existing pool of registered users. Another option would be Amazon Prime Channels, which have an existing base of users that are already paying for premium content, and who tend to spend more than casual non-Prime viewers. Amazon also has their credit card details. ITV Hub+ is already available through Amazon Channels in the UK.

Research by Market
Media & Advertising
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