Analyst: Is Britbox in trouble?

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Earlier this month ITV unveiled its Q3 numbers with analysts praising the broadcaster for a much stronger than expected advertising take up and anticipating an advertising increase of around 24 per cent by the end of the trading year. But Britbox, the ITV and BBC-backed OTT service, could be in trouble.

Analysts from investment bank Berenberg are concerned about Britbox. While ITV management say that Britbox is doing well and “according to plan” the bank is worried.

Berenberg says: “Britbox UK data checks are not positive.”

The bank used data from traffic analysis specialists Similarweb and says: “Our data checks suggest that users (and we assume subscribers too) have declined sequentially. Probably there will be a Christmas pick-up – there is some seasonality in this business, just as there was in pay-TV – but we remain concerned that Britbox UK will not deliver sufficient growth in customers to break even, and that the only way to reduce losses will be to cut marketing spend and content investment. We continue to believe that Britbox UK is an unnecessary distraction, and that management should focus on the monetisation and maximisation of audiences.”

Berenberg explains its worries, saying: “[ITV] has not released any subscriber numbers since the interims, when it reported 555,000, up 10 per cent from the c500,000 reported at the year end. While subscribers will obviously be a subset of installs – some will install but not subscribe – the [data] suggest that Britbox is stagnating, or even declining.”

“This is not surprising, in our view: UK consumers are returning to more normal patterns of behaviour, hence lower TV consumption overall,” suggests Berenberg. “

At the same time, Britbox UK faces significant competition in the face of Netflix, Amazon, Disney+, Apple TV+, which dwarf the UK service. Consumers have only so much budget, and we think Britbox lacks sufficient premium content to become an obvious choice for consumers facing this array of service. We note that Peacock UK entered the market last week, bringing a good back catalogue of popular NBC/Comcast shows. While Peacock UK is advertising-funded, so not competing with Britbox UK for the consumer’s pound, it provides the average UK household with yet more content.”

Britbox ownership structure

· Britbox UK is owned 90 per cent by ITV (and 10 per cent by BBC)*
· Britbox US/Canada is a 50/50 joint venture between ITV and BBC Studios
· Britbox Australia is a 50/50 joint-venture between ITV and BBC Studios
· Britbox Sth Africa is a 50/50 joint venture between ITV and BBC Studios

*The BBC has an option to increase its stake to 25 per cent


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