Streaming Subscribers Overtake Pay-TV Customers for First Time in the U.K. || SIKH VOGUE ||

The level to which Netflix and Amazon are redefining the TV picture has hit home in the U.K. as new data from media regulator Ofcom show subscriptions to streaming services outnumbering those to traditional pay-TV for the first time. Pay-TV revenues also dropped for the first time after years of sustained growth, Ofcom said.

The numbers are sobering reading for pay-TV heavyweight Sky and Britain’s other major pay-TV firm, Virgin. A mitigating factor is that Sky itself has a streaming service, Now TV, and Virgin also offers a range of services beyond pay TV. But the inescapable fact is that Netflix and Amazon have reshaped the subscription business in Britain.

The findings are contained in Ofcom’s first Media Nations report, which covers TV trends in the U.K. and was issued early Wednesday, British time. It highlights a “competitive shift within the U.K. television industry, driven by the rise of the major global Internet companies,” as well as by changing consumer behavior.

 Subscribers to Netflix, Amazon Prime and Now TV hit 15.4 million in the first quarter of the year, compared to 15.1 million traditional pay-TV customers. Annual pay-TV revenues fell 2.7% in 2017 to £6.4 billion ($8.4 billion), while increased streaming revenues boosted the overall online video sector in the U.K., which was up 28% at £2.3 billion ($3 billion).

The pay-TV providers can take some comfort from the fact that most of the surging number of SVOD customers also subscribe to a traditional service, although more than a third have dropped some of their premium pay services.

Amid rhetoric from the BBC and others about protecting British-originated programming – the BBC recently saidit could make 18 series for the price of Netflix’s “The Crown” – the data show that only a small proportion of SVOD originals hail from Britain. In March 2018, Netflix had 753 originals, of which 35 were U.K.-made. Amazon had five U.K.-made originals out of 174.

The combined spending of £2.5 billion ($3.3 billion) by the BBC, ITV, Channel 4 and Channel 5 on homegrown programs in 2017 was down year-on-year – and is 28% less than the 2004 peak. An increase in co-production and funding from third parties has partly offset the decline.

“We have seen a decline in revenues for pay TV, a fall in spending on new programs by our public service broadcasters, and the growth of global video streaming giants. These challenges cannot be underestimated,” said Sharon White, Ofcom’s chief executive.

“But U.K. broadcasters have a history of adapting to change. By making the best British programs and working together to reach people who are turning away from TV, our broadcasters can compete in the digital age.”

The overall amount of time spent viewing broadcast television on the TV fell for the sixth successive year between 2016 and 2017. Viewing declined by 4.2% to 3 hours 22 minutes, down by nine minutes, mostly because younger viewers turned off traditional TV.

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