The switch away from broadcast linear TV is not synonymous with consumers turning their back on broadcaster content, however, and Ampere Analysis notes that broadcaster investment in their own VOD services has ensured they can still engage audiences who prefer to watch via streaming. “In fact, engagement with these broadcast-led video services has increased by 26% since Q1 2021,” the research company notes.

Ampere says it is far too early to write off linear TV, noting the stability of low-level viewing – characterised in its report as less than two hours per day. “This suggests that many Internet users still tune in for key live events such as sports, major reality TV shows and exclusive dramas. These content pillars should remain a key part of acquisition and commissioning strategies for linear broadcasters.”

The company concludes that there are opportunities for broadcasters to retain viewers through a mix of live and event content, and via enhancing broadcaster streaming offerings.

Minal Modha, Research Director at Ampere Analysis, says: “At first glance, the decline in linear TV viewing looks to be a worrying trend for broadcasters as their traditional audience begins to drift away. However, as the increased engagement with broadcast-led video services shows, if the linear channels can continue to adapt and provide a strong OTT offering for audiences switching from scheduled TV channels, they have an opportunity to retain them, albeit on a different medium.”

Other findings in the report show that:

• 19% of respondents in Q1 2021 where characterised as high linear TV viewers – those who watch at least four hours of broadcast TV daily. This figure was down to 15% in Q1 2023.
• The number of Internet users saying they watch 4+ hours of VOD content in a typical day is up from 58% in Q1 2021 to 62% in Q1 2023.
• Over half of Internet users say they watch more than four hours of streaming TV in a typical day.

Related content

How broadcasters increase their share-of-time in digital

The first approach is a greater focus on scripted content, with Towler arguing that BVOD (broadcaster VOD/streaming) services are underweight in this department when compared to SVODs (both for current catalogues and upcoming commissions).

She presented figures showing the proportion of UK SVOD and BVOD content catalogues that are scripted. Taken in January 2023 (from the Ampere service Ampere Analytics) these reveal that ITV has the highest proportion of scripted content among UK broadcaster streaming services, at 53%, but this is still lower than all the major SVODs.

The UK SVOD with the lowest proportion of scripted content is NOW, at 57%, while Disney+ leads with 84%. The Ampere Analysis figures show that My5 (the Channel 5 BVOD offer) has 23% scripted content, with All4 (from Channel 4) at 33% and BBC iPlayer at 45%.

Towler’s advice is that while scripted content is more expensive, it has higher engagement and better longevity. To support this, she offered the London audience a graph showing the average relative popularity of scripted vs unscripted titles in the months following release, using an Ampere Analysis Popularity Score that is a measure of relative consumer search activity levels on third-party sources such as Google and Wikipedia. This showed that scripted content begins life significantly more ‘popular’ than unscripted content and then increases that relative advantage dramatically in the months that follow.

The popularity data came from ‘Ampere Analytics, Ampere Commissioning’ (a service within Ampere Analysis) and covered the top 25 scripted titles and top 25 unscripted titles released by BBC, ITV, Channel 4 and Channel 5 for seasons released since 2018.

At launch, scripted content was around five times as popular as unscripted (based on the search activity), but at three months this was closer to 8x as popular, and at nine months it was in the region of 12 times as popular as unscripted.

With the cost of scripted content in mind, Towler demonstrated how the rate of growth for global content spend is slowing, but noted that co-commissions can be used to increase output. This is the second of her strategies to increase broadcaster share of digital viewing time.

She gave figures for the % of broadcaster scripted series that are co-commissions on a quarter-by-quarter basis. These showed regular fluctuations but a general downward trend.

For example, the highest peak for broadcaster scripted series co-commissions since Q2 2022 has been 11%, whereas there were peaks of 17% in Q2 2020 and 14% in Q1 2021. The most recent trough was 8% in Q3 2022, whereas previous troughs were 12% (e.g. Q3/Q4 2020) and 10% (e.g. Q3 2021 and Q1 2022).

Co-commissions are often among broadcasters’ most popular recent shows, Towler told the Connected TV World Summit gathering (once again using Ampere’s Popularity Score, and so based on relative consumer third-party search activity).

A diagram outlined the proportion of Top 50 popular titles in 2022 (in the UK) that were co-commissions (using the Top 50 across BBC, ITV, Channel 4 and Channel 5 – with the data again from ‘Ampere Analytics, Ampere Commissioning’). For all shows in the Top 50 during 2022, one-fifth were co-commissions. If you count only the newer content – the Top 50 shows in 2022 that were also released after 2020 – two-thirds were co-commissions.

“Co-commissions offer a cost-effective opportunity to increase the volume of premium scripted content in broadcasters’ slates,” Towler concluded.

Towler’s third suggestion is that broadcasters should take advantage of the fact that non-exclusive licensing is set to increase – meaning more studio titles will be available to license. She used HBO Max in the USA as an example, where the proportion of the catalogue that is exclusive was 80% in August 2022 but 75% in January 2023.

[The context, of course, is that when major international studios launched their direct-to-consumer ‘+’ services there was a general shift towards studios feeding their own streaming services with their own content – sometimes at the expense of third-party licensing. If studios are licensing more to third-parties again, broadcasters can boost their BVOD offer with the titles that become available.]

Towler also suggested that broadcasters can license their own content to (non-broadcaster) AVOD and FAST services to reach new audiences.

The fourth item on the ‘to-do’ list is to release more digital-first premieres, which Towler described as “key for transitioning viewers to the online platform.” Based on first-run series released in 2022, ITV is leading the way among UK broadcasters for BVOD premieres, with 7% of those first-runs going to the streaming service first. For Channel 4 the figure was 6%, with the BBC at 3%.

As well as getting linear viewers into streaming, first-run digital premieres will help draw in new audiences, she noted. Towler also advised that weekly releases on VOD help retain users and prolong engagement, compared to full-series drops.

The final part of Towler’s five-point plan is a focus on younger viewers. She had a graph showing that Netflix Originals skew younger than content on SVOD in general, and pointed out that these are backed by an aggressive social media strategy “that is key for engaging younger groups.”

Broadcasters could learn from Netflix in this regard. “A successful social media strategy across Instagram, TikTok and Snapchat can help engage this demographic,” Towler advised.

Saturation and price sensitivity

During the Future of TV Advertising Global in December, the research company Ampere Analysis outlined what it means for the industry as SVOD majors move into ad-funded tiers. Taking Netflix as an example, Richard Broughton, Research Director at Ampere Analysis, highlighted that global subscriber base growth year-on-year (YoY) dropped from 30% in 2015 to 4% in 2022 — a trend that is being witnessed by many video streaming services.

While increasing levels of competition continue to shape the market, one of the main factors influencing this shift, Broughton explains, is price. “When we look at sign-up and cancellation patterns among different subscriber bases, the main driver is price […] we found that the people who were leaving weren’t necessarily going to competitors, they were just looking at the price and thinking ‘that’s a bit steep, I can’t afford that’.”

Enter the ‘basic’ account’, a response to both consumer and business needs. But what does this mean for marketers? “The ad-tier is available to markets representing 70% of the global subscriber base,” noted Broughton, pointing out that “these are the larger, wealthier markets that Netflix operates in” – a good sign, from an advertising perspective.

Although the general level of discount is roughly $2-3 in most markets, there are differences between tiers that correspond with local levels of ad sensitivity: “If you’re in markets where consumers are more ad-tolerant, like Brazil, you get a lower discount – conversely in markets like Germany and Australia, where we see high levels of ad resistance, there’s a bigger incentive to take the basic tier.”

Unlocking new audiences

In general, the ad load is to be kept low, at 4-5  minutes per hour. While this may not seem like much compared to some broadcast TV ad loads, there’s no doubt advertisers will still be excited at the prospect of working with Netflix, especially considering the streaming giant has now unlocked a pool of consumers which, according to Broughton’s estimates, equates to “up to 34 million homes and 80 million people, or about 15% of subscribers”.

Since these audiences can be quite hard to reach via traditional media, this presents new opportunities for advertisers across the board, who now have the option to integrate ad-tiered SVOD into their media mix.

A path to sustained growth

Netflix’s turn to an ad-funded model — soon to be followed by Disney+ — marks the beginning of a shift in SVOD consumption. While global lockdowns drove a surge in TV screen time and streaming in the UK and beyond, there is now a fierce battle for attention against a backdrop of tighter household budgets.

Providing more affordable plans for viewers while keeping ad-load down is how streaming platforms such as Netflix reckon they can maintain revenue growth, driving their appeal to advertisers and consumers alike.

Ampere predicts that 19.3% of Western European users will sign up to an ad-supported tier by 2027, with most of them coming from Netflix’s existing customer base. The analyst company also believes subscriptions for the ad-supported service will grow at a rate 1.8% above an SVOD-only model, earning $2.2B more than it would have done without the ad-supported tier, by 2027. This will be driven by an ARPU uplift “combined with a modest increase in the overall subscriber base.”

According to Ampere, the 2023 ARPU for Netflix in Western Europe will be 4.9% higher than without the ad-supported tier, with this increasing to 8.6% by 2027.

Ampere Analysis said: “Western European viewers have the highest price sensitivity among Netflix’s customers which, combined with relatively high advertising rates on a Cost per Thousand (CPM) basis, makes advertising in the region a strong opportunity for the streaming giant.”

After AppleTV+ and Paramount+, Netflix was the most commonly chosen service among SVOD switchers, with almost 10% subscribing to the streamer. The least popular choices for SVOD switchers were Hulu (7%) and Amazon Prime Video (just over 6%).

The research also outlines which competitor is most likely to take direct spend from each streaming service and how customers’ existing subscriptions impact the direction in which they jump to other services.

According to Ampere Analysis, users leaving Netflix are most likely to subscribe to AppleTV+. The company notes that these switchers are “less adventurous in trying new services than switchers from other streaming services: they currently have the lowest number of streaming services among leavers from any of the major platforms.”

Those switching from Disney+ are most likely to subscribe to its sister service – Hulu – within 60 days, and conversely, those switching from Hulu are most likely to subscribe to Disney+. Similarly, while Paramount+ churners tend to choose AppleTV+ and Netflix as their next SVOD choices (in that order), their third most common pick is Showtime, which is also owned by Paramount.

Ampere Analysis believes this reflects the benefits that providers of a family of services enjoy as a result of the bundling effect, in terms of cross-promotion, greater ARPU opportunities and customer retention.

Both AppleTV+ and HBO Max churners are more likely to move their subscription to Paramount+ over other services.

The data and analytics company also revealed that around 30% of streaming subscribers switch services in any given two-month period, with 56% of churners choosing not to re-subscribe or sign up to a different service within 60 days. On average, 14% of users leaving a service re-subscribe to the same service within two months (a pattern Ampere Analysis calls ‘the boomerang effect’) therefore reducing effective churn.

Breaking the boomerang effect down by SVOD, Netflix unsubscribers are the most likely to return, with 23% re-subscribing within 60 days. The return rate for both HBO Max and Paramount+ is 15%. 11% of Disney+ and Hulu churners re-subscribe, as well as 10% of AppleTV+ leavers.

Ben French, Analyst at Ampere Analysis and author of the report, said: “Switchers are experimenting with different platform mixes within the home, moving spend to some of the newer and less penetrated services while maintaining a core base of services. It’s some of these newer, smaller services that the incumbent streamers most need to keep an eye on.”

Several European countries have already begun adopting regulations which require streaming services to ensure 30% of their content is European.The high proportion of European content on Netflix in most European markets means the company can meet these quotas without a negatively impacting their regional business, across their entire European footprint.

Exceptions include the UK and Ireland, where titles on the service are 27% European. Netflix would have to add 408 European titles (or remove 953 non-European titles) to reach 30%. The company also falls short of 30% in France by 344 titles, Belgium by 220, and Switzerland by 230, as well as in Italy and Denmark by less than 60 each.

At the end of 2021, Netflix’s content in 16 of the 17 markets analysed by Ampere Analysis was under 30% European, reflecting a focus on investing in European content over the last year. Guy Bisson, Research Director at Ampere Analysis, said: “The milestone is a reflection of heavy investment in content outside the US which is rapidly being mirrored by other global streaming players. Perhaps more surprising than Netflix’s 30% milestone is the fact that some of the newer major studio players are already rapidly approaching a similar proportion of European content in their local catalogues.’’

Ampere Analysis also reveals that Amazon Prime Video is set to exceed the 30% mark in Germany, Switzerland and Italy, and matches Netflix’s proportion of European content in the UK (27%). In other European markets, the streaming service ranges from 16% to 28% European content, according to the data and analytics company.

HBO Max – the Warner Bros. Discovery owned streaming service – already exceeds 25% European content in most of the markets it has a presence in, while Disney still stands at around the 10% European content mark but, according to Ampere Analysis, has recently been ramping up its catalogue of European content.

“While, streaming services have been challenging the traditional pay TV model within the wider media landscape for some years now, sports broadcasting rights remained the final major property yet to see significant investment from pure-OTT services”.

Italy represent the market with largest share of total sports rights spend contributed by subscription streaming services – 53% by the end of the year. This follows DAZN’s landmarks win for domestic broadcast rights of Italy’s leading football league, Serie A. In Germany, subscription services contribute 32% to sports rights spend, and in Spain and France the figure is 16% and 14% , respectively.

Only 2% of total sports rights spend will come from subscription streaming services in the UK. Ampere Analysis notes that the British sports broadcast market is dominated by incumbent Pay TV service Sky, and also BT Sport (to a lesser degree). Among UK sports viewers with access to the internet “only 15% say they never watch sports via online video services, while 62% stream sports on a weekly basis or more” according to the company.

Across the big five European markets in 2021, DAZN became the third largest spender on broadcast rights for sports, rising above BT Sport, and will overtake Telefonica this year to become the second largest and spending a total of €1.8B. Sky will continue to be the largest spender in 2022, investing €3.4B in sports rights. Ampere Analysis also notes that Amazon will move from 10^th to 6^th place in terms of sports rights spend this year.

A report from Nielsen earlier this year shows that rights deals with OTT services for the top five sports leagues (at the local level) – as a percentage of total value –  has grown from 4% to 23% in the last two years. OTT rights deals  for the UEFA Champions League in the same markets has risen from 5% in 2018 to 23% in 2021.

A significant theme on the agenda is the imperative of establishing adequate cross-platform measurement for TV advertising, and the major initiatives currently taking off. Tom Sherwood (Product Lead at YouTube), Rhian Feather (Head of Media Planning, OMD), Kristin Dolan (CEO of 605) and Martin Greenbank (Head of Advertising Research and Development, Channel 4) will reflect on the core challenges associated with cross-platform measurement, and assess how fast the industry should adopt impressions, deterministic data, attention metrics or pure business outcomes as a standard for measurement. CFlight – the Total TV campaign evaluation tool developed by Sky and NBCUniversal, which is set cover 98% of broadcaster advertising exposures in the UK – will be discussed on a panel, which includes Lucy Bristowe (Director of Insight & Research, Sky), Greenback and Glenn Gowen (Head of Audiences – Commercial, ITV).

Chrissie Hanson (Global Chief Strategy Officer, OMD Worldwide) and Nicholas Grand (SVP Transformation, Global Investment, Omnicom Media Group) will take a deep dive into attention metrics as a way to increase brand awareness and business outcomes, as viewers become exposed to fewer ads in their migration to connected TV platforms.

Thomas Bremond (GM International, FreeWheel) is joined by Verica Djurdjevic (Chief Revenue Officer, Channel 4), Paola Colombo (General Manager at Publitalia ’80 Mediaset), and Katie Coteman (Vice President, Advertising and Partnerships at Discovery), to explore the impact of CTV on TV’s evolution and discuss the key role and strategies of media brands in sustaining TV’s value. They will provide broadcaster perspectives on the current landscape and discuss why it is time to ‘reset’ TV, ensuring interoperability and growth opportunities across the entire ecosystem.

The event also tracks the latest developments for improving media planning, campaign outcomes and targeted advertising. A panel discussion between Lara Izlan (Director of Data Strategy, ITV) and Jean Paul Edwards (Chief Product Development Officer, OMD EMEA) will take a look at advertiser/media owner data matching, including what is possible, and practical considerations when using these first-party data sets.

Samira Ebrahim (European ICP Strategy Director, Mars Pet Nutrition) and Richard Fuller (Senior Director of Engagement at Finecast) will explore how brands can target high value audiences in a new era of TV and data driven solutions. The extent to which connected TV is able to achieve incremental reach in Total TV campaigns will be evaluated in a panel discussion including Andy Jones (Samsung Ads), Paul Gubbins (CTV Strategy, Publica), Julie Selman from Magnite and Mara Negri (Publieurope EBX Board Director).

Several sessions will look at broad shifts in strategy across the industry. Research Director at Ampere Analysis, Guy Bisson, will shed light on the distribution and content strategies leading media companies are using to maintain and grow audiences, reviewing the different approaches employed by broadcasters, studio/subscription channel groups, AVODs and SVODs. Additionally, Emmanuelle Godard, Digital Marketing and Innovation Director, Canal Plus, will explain how CONNECT+ allows advertisers to measure and optimise broadcast campaigns on their own KPIs.

Eleni Marouli, Head of Market Developments at Ofcom, will run attendees through the latest developments in UK television with regards to viewing, revenue and spend, and the impact of the pandemic on linear and online viewing patterns. Christian Kurz (SVP, Global Streaming and Corporate Insights, ViacomCBS) will outline the profound cultural importance of TV, revealing the results of a study where ViacomCBS challenged consumers aged 16-49 in Italy, the UK, USA, Mexico, South Africa, Indonesia and Australia to go about their lives without engaging in any conversations about TV in any of its forms (including streaming). He also reflects on the dynamics informing the health of the television industry.

“A further 5%-10% of scripted titles which we would expect to have been released during the autumn months are likely be lost entirely due to the current production shutdown,” the company declares. “The proportion of scripted releases unaffected by the shutdown only rises above 40% in March 2021.”

Titles scheduled for release from June to August are likely to largely be in post-production. Even if production is able to restart in June, underlying effects of the shutdown will be felt in the scripted TV market for the remainder of 2020, and well into 2021, the research firm warns.

“The knock-on effect of delayed releases is a likely depression of the number of new commissions for some time after the shutdown ends, as commissioners look to fill schedules with delayed projects they have already invested in before signing off new ones,” says Fred Black, Senior Analyst at Ampere Analysis.

The analyst firm expects the unscripted market to weather the storm more easily thanks to the production of non-location-based, and Covid-related, content. “However, the delay of summer ‘blockbusters’ like The Bachelorette and Love Island will have a negative impact on even the unscripted sector.”

While a number of unscripted commissions expected over Q2 and Q3 2020 will be delayed, Ampere predicts that release schedules [for unscripted content] will begin to return to normal by the autumn, with the percentage of titles unaffected rising to 71% by October.

While commissioning of scripted content is down by 40% year-on-year (March to May), unscripted commissions have actually increased compared to 2019, partly to fill schedule gaps left by delayed or cancelled scripted series. “However, a large proportion of these titles have been Covid-19-specific commissions. If this content is excluded, unscripted commissions have been down 27% since the beginning of March.

“Unlike scripted content, commissioners can typically order enough adapted unscripted content during lockdown to cover normal numbers of new unscripted releases, as well as help cover schedule gaps from delayed or cancelled scripted content,” says the report. Fred Black adds: “This number of extra commissions will begin to wane as the shutdown ends, with audience appetite for Covid-19-specific content already showing signs of falling.”

Focusing for a moment on commercial broadcasters in Europe, Ampere Analysis predicts that they will cut programming budgets to make up for a loss in ad revenues. It adds: “Longer term, European commercial groups are expected to continue focusing on producing original content and move away from large volume acquired content deals, especially in the case of U.S. shows.”

In related news, UK broadcasters (ITV, BBC, Sky, Channel 4, Channel 5, ITN, STV, the Commercial Broadcasters Association (COBA) and Pact (the trade association representing independent television, film, digital, children’s and animation media companies in the UK) have joined forces to introduce new, industry-wide guidelines for producing television safely as soon as government guidance allows. They cover principles like giving greater consideration to people at higher risk of harm, reducing the number of people involved in a production, and considering mental health and wellbeing.

There is practical guidance around location (e.g. the physical capacity to enable social distancing and hygiene facilities), travel (minimised and with social distancing enabled), work patterns (enabling small groups who do not come into contact with other groups) and equipment hygiene (e.g. edit suites, cameras and headsets).

The guidance complements the forthcoming British Film Commission guidance on managing the risks associated with film and high-end TV drama production.

The UK’s Culture Secretary, Oliver Dowden, says: “I’m keen to get cameras rolling as soon as it is safe. This is a significant step forward in getting our favourite shows back into production.” Carolyn McCall, Chief Executive at ITV says, “Our production teams are now working hard to bring many more much loved shows back for viewers…[the industry has] created clear guidelines to give producers a framework within which they can ensure that their production is safe.”

Tony Hall, BBC Director-General, notes that we can only move forward with the right safety measures in place. “This guidance is an attempt to get that right. Clearly we will keep it under review.” Gary Davey, CEO of Sky Studios, adds: “We will continue to work closely with our international partners, share best-practice and continuously review and evolve the guidelines as we return to production.”

Ben Frow, Director of Programme at ViacomCBS Networks UK, comments: “The UK is a global leader in content production and these guidelines will help pave the way to getting our sector safely back up and running, as we begin to navigate a ‘new normal’. Through a consistent and collaborative industry approach, we can work together with suppliers to reframe the parameters of programme-making.”

The survey of 1,003 internet users found that 27% of respondents were aware of Disney’s streaming plans and that 22% indicated they were ‘likely’ or ‘highly likely’ to subscribe to Disney+.

Two groups of respondents – people aged 18-24 and households with children – showed both higher awareness of the service and more willingness to subscribe, with 34% of 18-24 year-olds and 36% of households with children saying that they would pay for Disney+.

Ampere identified the households with children demographic as “key” for Disney+ as it is nearly twice the size of the 18 to 24-year old group and offers “the greatest immediate opportunity”.

In terms of content, the average respondent said that Marvel titles, Pixar titles and Disney’s catalogue of animated films were the most valuable content to gain access to.

While programmes available via broadcast or cable TV like The Simpsons or National Geographic were deemed less crucial, Ampere did suggest that basic cable shows will be important for subscriber stability and churn management.

The survey found that that Star Wars underperformed with younger audiences, appealing more to people aged 35 and over. Ampere said this content would be key to attracting older audiences to the service.

“There’s no question of a strong appetite for the Disney+ service – particularly amongst two distinct target audiences: households with children and 18 to 24-year olds,” said Minal Modha, Consumer Research Lead at Ampere Analysis.

“Away from this core group, there’s also a clear opportunity to broaden the content offering and attract a new audience by leveraging the Fox movie catalogue with titles such as Bohemian Rhapsody and The Post to reach an older audience.”