Over recent years the number of ways to watch TV has greatly increased with viewers able to choose a variety of platforms, both
free and pay. Traditional linear television viewing remains resilient despite significant changes in the market and in the availability
and delivery of content. Viewing habits also vary by demographic with younger viewers watching more non-linear content than older
In the UK linear television viewing remains the most popular form of media entertainment despite year-on-year fluctuations. UK average
television viewing in 2016 was 212 minutes per day which is similar to 2015 (216 minutes) and a similar level to ten years ago (Source:
Non-linear viewing, while currently only a small proportion of total viewing, is growing fast, particularly via Subscription Video on Demand (SVOD) services such as Netflix and Amazon, which have seen exponential growth over the last few years. We continue to invest in ITV’s online offering, the ITV Hub, along with rolling out our SVOD service, BritBox in the US to enable us to compete in this market.
ITV competes for viewers with the BBC and commercial broadcasters including Channel 4, Sky and Channel 5. Over the last few years, the number of available channels has grown which has impacted the Share of Viewing (SOV) of the traditional broadcasters. SOV for the other
channels increased to 21.7% in 2016 from 21.1% in 2015. Despite an increase in the number of channels, ITV and BBC1 continue to be the only channels consistently able to deliver mass audiences as well as targeted demographics, and in 2016 ITV delivered 99% of all commercial audiences over five million viewers and 95% over three million. In 2016 the ITV family of channels increased their SOV to 21.4% (2015: 21.2%), second only to the BBC’s family of channels at 31.9% which lost share during the year (2015: 32.7%) as a result of BBC3 moving online.
*Viewing data is based on Weeks 1-52 for 2016 compared to Weeks 2-53 for 2015.
Free-to-air television in the UK is delivered through services including Freeview, YouView and Freesat, while linear pay television is delivered through operators such as Sky, BT, Virgin and Talk Talk. The platform mix between free-to-air and traditional linear pay television has remained constant for a number of years at around 50:50. Linear pay television revenues continue to grow but the market dynamics are changing rapidly as established pay television providers such as Sky and Virgin face increasing competition from relatively new entrants to the market such as BT, Netflix and Amazon.
Increasingly homes are supplementing their free television with other forms of paid content including SVOD services such as Netflix, or by purchasing additional channels through ‘no-contract’ providers such as Now TV or Talk Talk TV Store. Around 30% of homes in the UK have an SVOD service and this is weighted towards those homes that have linear pay TV (Source: BARB). Including SVOD pay services, the platform mix in the UK is roughly 40% free-to-air and 60% paid viewing.
ITV participates in the pay television market, earning revenue from various third parties, including Sky and Virgin, through the licensing
of channels and content. ITV also has its pay only television channel, ITV Encore, on the Sky platform along with our other pay channels, ITV2 HD, ITV3 HD and ITV4 HD.
ITV also recently announced the creation of a joint venture with the BBC to launch BritBox, a new SVOD service in the US. The service
offers a significant amount of content from both broadcasters and gives ITV access to the fast growing SVOD market in the US.
The platform mix in the UK is roughly 50% free-to-air and 50% linear pay TV.
Non-linear viewing of long-form content includes recorded, or timeshifted viewing (up to 28 days) and catch-up of live television (linear television - up to 7 days), and also encompasses Video on Demand (VOD) and OTT delivery of other long-form content such as box sets and movies.
While non-linear viewing has grown fast it still accounts for a small proportion of total viewing time. In the UK we estimate 81% of all
viewing of legal long-form content is live (including simulcast), with a further 12% timeshifted via a Personal Video Recorder (PVR) and watched within 28 days of the original broadcast date. Of the estimated 7% of content viewed on demand, 3% is catch-up viewing of broadcaster content via the television set or to other devices such as tablets and mobiles. The remaining 4% of content is other VOD viewing, where viewing of box sets via services such as Netflix is replacing viewing of DVDs. This is growing quickly driven by increased availability of devices such as smartphones, tablets and connected televisions.
There is currently no industry measure for online viewing. BARB are in the process of developing a joint-industry, audited measure of viewing online television.
ITV generates revenues from advertising through traditional broadcast, sponsorship and online, and competes with commercial broadcasters and other advertising media, for its advertising revenues. In the UK, television advertising (including Video on Demand (VOD), sponsorship and other television revenues) continues to hold a significant share of the overall advertising market with a share of 27.5% in 2016, (2015: 28.7%). Internet advertising (search, classified and display) has grown its share to 46.6% in 2016 (2015: 42.7%), making the UK one of the most
developed markets for online advertising. This growth is at the expense of print advertising, which declined to 15.6% in 2016 (2015: 18.2%).
The UK television advertising market is extremely difficult to measure as all broadcasters have different definitions. We estimate ITV’s Share of Broadcast (SOB) (which is based on pure linear television advertising excluding VOD, sponsorship and self promotion) to be 47.4% in 2016 (including UTV), up from 44.7% in 2009. This increase is because of ITV’s unique ability to deliver mass audiences across multiple regions and in key demographics.