BATTLE FOR UK TELEVISION INDUSTRY REVENUE SET TO INTENSIFY
For more information about Tomorrow Calling, please visit www.redbeemedia.com/tomorrowcalling
• New research reveals optimistic but competitive outlook fuelled by growth in online video services and new commercial opportunities
• Online video pay revenue and advertising revenue both predicted to quadruple by 2020
• Internet and technology companies expected to challenge for premium content rights
The UK television industry expects both pay and advertising revenues from online video services to quadruple by 2020, according to new research findings unveiled today by Red Bee Media, one of the world’s leading media management companies.
The research, which surveyed executives from across the UK television industry on their predictions for business models and revenue streams in 2020, found that more than three quarters of participants (78%) are positive about the financial outlook for the industry, expecting growth both in traditional TV revenues and new revenue streams too, such as online services that capitalise on subscription payments and new commercial opportunities. However, incumbent broadcasters and platforms are likely to face growing competition for this revenue, with internet and technology companies expected to be the biggest challengers.
The survey findings are the latest instalment in Red Bee Media’s Tomorrow Calling programme which aims to build a picture of the media world in 2020, its technological possibilities and market dynamics through a series of think tanks, quantitative and qualitative research, one-to-one interviews, live panel debates and white papers.
Key findings:
• An optimistic outlook; fast growing revenues – The UK television industry expects online video services to fuel significant industry growth in the coming years with annual revenue from pay online TV services predicted to quadruple by 2020[i].
o Industry participants also predict that annual revenue from online advertising will quadruple by 2020, increasing by 320% from 2010[ii].
o Non-traditional revenue sources are expected to become increasingly significant with 58% of respondents predicting that product placement and ad-funded programming will become important income streams.
• Major competition – However, this growth will come at a price. As the UK’s digital infrastructure matures and as broadband connectivity spreads, industry participants believe that the battle for industry revenues will intensify, with increased competition from the technology industry as major internet businesses and device manufacturers ramp up their investment in the market.
o Around two thirds of respondents (64%) believe that the growing influence of digital gatekeepers such as Apple, Google, Amazon and Facebook is the most important challenge facing their company through to 2020.
o Online video aggregators such as YouTube are predicted to benefit the most from growing advertising revenue, with 67% of respondents expecting aggregators to have the greatest success at growing their share of revenue.
o The importance of new platforms and IP-enabled devices will also be a key factor; industry respondents expect nearly a quarter (23%) of adults to watch video through games consoles by 2020, up from 12% in 2010[iii].
• Content ‘goldrush’; but more competition for premium sports and film rights – New players are predicted to make a significant impact on the industry with traditional broadcasters going head-to-head with internet and technology companies for content rights. Three quarters (72%) of respondents believe that competition for premium content will intensify dramatically by 2020, as more companies seek to acquire rights.
o 57% predict a major technology company such as Google, Apple or Samsung, will acquire a package of live rights to Premier League football.
o Around half of respondents (46%) expect YouTube to invest over £100 million on commissioning original video in the UK by 2020.
o 59% of respondents expect Sky to spend more on TV production in the UK than ITV.
Bill Patrizio, CEO of Red Bee Media, commented: “From talking to the industry, it’s clear that technology and internet businesses are fast becoming significant players. The question we need to ask ourselves is whether the innovations brought by these new entrants are going to sustain or disrupt our industry in the years to come. Will the internet be the industry’s friend or foe? And what role will regulatory bodies play in determining the impact and pace of change? If the last ten years have seen the convergence of broadcasting with broadband, it’s likely that the remainder of the coming decade will see a collision and competition between business models driven by consumer demand and expectation and changing patterns of media consumption. Media companies will have to fight hard and innovate in a fast changing, technologically driven landscape if they are to make the most of this flourishing market”.
The research findings were revealed today at the Media Guardian Changing Media Summit 2012 by Red Bee Media CEO, Bill Patrizio. The findings were then debated by an expert panel chaired by media and technology analyst and commentator, Kate Bulkley, and featuring: Eric Berger, Executive Vice President, Digital Networks, Sony Pictures Television; Cindy Rose, Director, Digital Entertainment, Virgin Media; Mark Howe, Managing Director, Agency Operations, North & Central Europe, Google; and Claire Tavernier, Senior Executive Vice President, FMX and Worldwide Drama, FremantleMedia.
For more information about Tomorrow Calling, please visit www.redbeemedia.com/tomorrowcalling