UK broadcasters risk losing £1bn a year to online rivals
August 29, 2017
UK broadcasters such as the BBC, ITV, BT and Sky could lose a combined £1 billion (€1.07bn) per year if rival services from Amazon, Facebook and YouTube become dominant players in the TV industry over the next decade, according to a report by by OC&C Strategy Consultants.
The report says that the TV industry could suffer the same fate as industries including music and news where powerful digital newcomers – including Apple, Google, YouTube – now take a significant share of revenues. The report argues that broadcasting could be controlled by one or two “super-aggregators” that would act as viewing gateways for consumers looking for a simple way to access a plethora of content.
The modern TV viewer now has an array of viewing options to choose from, with the BBC iPlayer, Amazon Prime Video and YouTube among the platforms vying for viewers. More than 20 per cent of under-35s use more than seven services to keep up with their favourite shows, and 40 per cent say they are becoming confused by how many options are available, according to an OC&C survey.
“Viewers are facing a complex web of different routes to access TV content, leading to an unsustainable level of confusion and inconvenience,” commeted Mostyn Goodwin, partner at OC&C. “This environment is giving rise to the need for a super-aggregator service that provides a universal access point to content.”
The report estimates that the UK broadcast industry – which include the TV businesses of the likes of Sky and BT, ITV, Channel 4, Channel 5 as well as the BBC’s licence fee and commercial income – is worth up to to £15 billion in revenues annually, including advertising revenues and pay-TV subscriptions.
OC&C based the £1 billion loss figure – equivalent to the TV industry’s annual profit from broadcasting activities – on an analysis of the proportion of revenue that middlemen, or aggregators, have taken from traditional players in other sectors.
“This is not theoretical, in other industries we have seen how powerful these aggregators can become,” said Goodwin.
The report identifies Amazon, Facebook and YouTube, each of whom have enormous global user bases, as being potential middlemen for TV viewing and the biggest threats to traditional TV broadcasters.