The number of UK subscriptions to streaming services such as Netflix has overtaken those to traditional pay-TV for the first time, marking a major shift in the UK’s viewing habits, according to findings in regulator Ofcom’s Media Nations report, a comprehensive study of major trends in the UK’s television, radio and audio sectors.
The amount of revenue generated from pay-TV has also fallen for the first time, after a period of sustained growth, Ofcom research finds.
Spending by the BBC, ITV, Channel 4 and Channel 5, on new, UK-made television programmes fell to a 20-year low. At the same time, people are spending less time watching television: average daily broadcast viewing on the television set fell by nine minutes in 2017 – and is down 38 minutes since 2012.
The report highlights a competitive shift within the UK television industry, driven by the rise of the major global Internet companies and the changing habits and preferences of UK audiences. With more choice for viewers than ever before, UK broadcasters are competing for viewers in an increasingly fragmented landscape, says Ofcom.
Key findings include:
Streaming overtakes established pay-TV. The total number of UK subscriptions to the three most popular online streaming services – Netflix, Amazon Prime and Sky’s NOW TV – reached 15.4 million in Q1 2018, overtaking, for the first time, the number of pay-TV subscriptions, at 15.1 million; and
“Today’s research finds that what we watch and how we watch it are changing rapidly, which has profound implications for UK television,” noted Sharon White, Ofcom’s Chief Executive.
“We have seen a decline in revenues for pay-TV, a fall in spending on new programmes by our public service broadcasters, and the growth of global video streaming giants. These challenges cannot be underestimated.
“But UK broadcasters have a history of adapting to change. By making the best British programmes and working together to reach people who are turning away from TV, our broadcasters can compete in the digital age.”
How people are watching TV
The Media Nations report also shows how increased take-up of superfast broadband and connected televisions is driving changes in how people watch TV.
Across all devices, the UK’s total television and audio-visual daily viewing in 2017 reached five hours and one minute.
The majority of this daily viewing (three hours 33 minutes or 71 per cent) was to broadcast television, with the remainder (one hour 28 minutes or 29 per cent) to non-broadcast content, such as YouTube and subscription on-demand services, such as Netflix and Amazon Prime Video.
Younger viewers (age 16-34), however, watched more non-broadcast than broadcast content – an average of 2 hours 37 minutes a day (54 per cent) across all devices, compared with 2 hours 11 minutes (46 per cent) respectively.
Risks to public service broadcasting, but satisfaction remains high
Viewers’ confidence in public service broadcasting remains high. Of those people who watch channels from the public service broadcasters, three-quarters (75 per cent) say they are satisfied, and 84 per cent of people considered trusted news to be the most important feature of their output.
But the report also underlines the challenges facing the UK’s public service broadcasters from changing technology, audience fragmentation and global competition.
It reinforces Ofcom’s call, earlier in 2018, for UK broadcasters to collaborate to compete to match online competitors’ growing scale. That means UK broadcasters joining forces with each other, or with third parties, to share ideas and pool resources.
Ofcom expects public service broadcasters to adapt for the digital age by finding new ways to distribute programmes; capture younger audiences; and make world-class content that reflects life in the UK – which has not typically been a focus for global internet video streaming companies.
Music streaming overtakes physical sales
As with video streaming, music streaming services, such as Apple Music and Spotify, continue to soar in popularity. For the first time, music industry revenues from online streaming subscriptions exceeded physical sales in 2017. Total retail music sales grew by 6 per cent in real terms between 2016 and 2017 driven by a 38 per cent increase in online streaming service subscriptions to £577m.
In contrast, overall sales of physical music formats fell to £470 million.The shift away from music ownership towards streaming was reflected by a 25 per cent drop in sales of music downloads.
Almost a quarter (23 per cent) of all adults listen to music via streaming services each week, increasing to over half (51 per cent) of those aged 15-24.
Radio listening reached a significant milestone in the first quarter of 2018, as, for the first time, more than half of all listening hours (50.9 per cent) were through a digital platform – DAB, online or through digital TV.
This is being driven by an increase in the proportion of adults who now have a DAB set (64 per cent) and the greater choice of national commercial stations now available to listeners.
Noting the omission of unlicensed streaming audiences from the findings, Chris Anderson, Head of Film & TV at digital piracy monitorring specialis MUSO said: “Today’s figures from Ofcom are a landmark on the road we have been walking down for a long time. Technology has completely transformed the way people are able to watch TV and the days of being tied to a TV schedule are well and truly behind us, with streaming services now officially the preference for the majority of viewers.”
“The word ‘officially’ is key – because what these figures from Ofcom don’t take into account is the many hundreds of thousands of people who are streaming TV in the UK through unlicensed services and sites. In reality, with piracy figures considered, streaming probably overtook traditional TV long ago – but piracy audiences are overlooked by TV broadcasters, streaming services, and regulators to their detriment.”
“The idea that services such have Netflix and Amazon Prime have eradicated piracy is a fallacy. Our figures show that global piracy has increased year-on-year, in spite of the rise of streaming services. The UK had 4,776,616,717 total visits to film and TV piracy sites in 2017 alone.
“If UK broadcasters are serious about their mission to adapt their revenue streams to compete in the digital age, they need to not only consider the audiences lost to legitimate streaming services but also illegitimate ones. Piracy audiences are one of the great untapped pools of wealth – they have extremely high intent to access content but are often simply unable to. Finding ways to access this audience could be the secret bringing higher profits back to broadcasting,” he concluded.