BritBox, the SVoD joint venture beteen the BBC and ITV, is unlikely to be profitable before 2024, unlikely to contribute to ITV’s bottom line until 2023, and could cannibalise ITV’s existing free-to-air business, according to Berenberg.
The bank says: “the question of positioning the service in relation to the core, or traditional, linear free-to-air business…may be the most complex question that ITV and the BBC have to deal with.”
They argue that BritBox could cannibalise ITV’s linear services in the same way that Netflix and Amazon, the threat it is designed to counter. If the new service includes original content from ITV that would otherwise air in primetime on its main channel, this could drive subscriptions but eat into advertising revenue for the free-to-air business.
Berenberg also highlights a second risk – that the library content used to populate the subscription service would otherwise be the content that finds its way to ITV2, 3 and 4, as well as removing the revenue stream accruing from the sale of library content to the likes of Netflix. If successful, BritBox may also cannibalise ITV Hub and Hub+ the premium ad-free option of ITV’s existing catch-up and on-demand service.
Despite all this, the bank accepts that ITV had little choice but to forge a strategy to take on the streaming threat. Much, the analysts say, will now depend on getting the windowing strategy exactly right.