A report from equity analysts at Berenberg Bank suggests an unclear future for the ITV/BBC BritBox streaming joint-venture. The bank says that Britbox is a “distraction that will not succeed”.
The bank’s report makes blunt reading for the BritBox venture. “BritBox trends look weak: While the near-term picture on advertising looks clearly more positive, the long-term trend for linear TV is clearly not much different in that viewers continue to shift towards streaming services and subscription VoD. In that respect, we note that while Netflix and Disney+ have continued to see install penetration growth, Similarweb data suggests that BritBox has stalled since the start of 2021.”
The bank is not anticipating much support for BritBox’s major partner ITV.
“We continue to believe that ITV’s paid-for platform will struggle to achieve meaningful customer numbers in the UK, given tough competition and the lack of substantial original content investment. On this basis, it is hard to see how BritBox losses can be meaningfully reduced,” says the report.
The bank adds: “Even if the story for 2021 and 2022 looks a bit better, we believe ITV faces structural pressure that will make it hard for the company to grow earnings or cash flow on a medium-term view. It also faces the UK specific HFSS ban. Moreover, we think BritBox is a distraction that will not succeed and believe that a better hedge for the company would be an ‘all-in’ focus on monetisation of advertising-funded VoD. By putting much of its library content behind a paywall, ITV is reducing the amount of premium online video advertising inventory that it can sell.”