ITV and BBC Plan to Bring Ad-Free SVOD Service ‘Britbox’ to UK


 

ITV today announced plans to launch Britbox, an ad-free subscription video on-demand (SVOD) service featuring British produced content, in the UK. Britbox was launched as a collaboration between ITV and the BBC in the US back in 2017, and ITV now says it is in negotiations with the BBC to launch the service domestically. A UK launch would be particularly significant – there have long been calls for UK broadcasters to collaborate on a domestic SVOD service to better compete with the likes of Netflix, but a previous attempt (dubbed ‘Project Kangaroo’) was shut down by regulators before launch in 2009.

CEO Carolyn McCall, speaking to investors, said that talks between ITV and the BBC are in their concluding phase, and that the two have agreed their joint vision for the service. She also said that she expects other public-service broadcasters to join the initiative, without naming anyone specifically, but Channel 4 and Channel 5 seem like likely contenders.

“It will be completely ad-free with a subscription and there are no plans to have subscriptions outside of Britain,” said McCall. “If we have an agreement with the EU and you are a British subscriber, you will be able to watch it in the EU when you go on holiday.”

Britbox will provide “an unrivalled collection of British boxsets and original series” according to McCall, who said that ITV had conducted research showing there is high demand in the UK for a British-content focussed SVOD service, particularly from Netflix users. ITV also found that the number of homes subscribing to multiple SVOD services grew by 32 percent over the past year, saying that this shows that audience have still not reached ‘SVOD saturation’ yet.

ITV says it is planning net investment in the service to reach £25 million this year, which will rise to around £40 million in 2020, after which net investment will decline (due to rising subscription revenues, rather than falling spending). Part of this investment will be on original content produced exclusively for the platform, which McCall described as “absolutely necessary” for hooking viewers into the service.

McCall also suggested that the launch will see less ITV content made available on competing services like Netflix. While ITV Studios will continue producing content for other platforms when commissioned, TV shows created for ITV’s linear channels are less likely to be licensed elsewhere. “A very good example of that is 18 months ago, Love Island one and two went to Netflix, but that’s because there was nowhere else to put it,” she said, saying that in the future that sort of content would go to Britbox.

ITV believes Britbox will be effective in increasing its reach and competing with Netflix, and some others agree. “The SVOD announcement should give ITV (and the BBC) a powerful weapon to compete with Netflix and other SVOD players,” said analyst Liberum in a note to investors. “In the US, Britbox has been a success, with >500K customers and annualised revenues in the c. $50m estimated range, and we think there is plenty of appetite for a similar UK service.”

The announcement comes as ITV posted mixed financial results for 2018, in which its digital growth offset a fall in linear ad revenues. Online viewing grew 32 percent over the past year, with digital ad revenues up 36 percent, but overall ad revenue was only up one percent..

While it’s pushing into SVOD, ITV is also looking to boost its digital ad revenues further. McCall said the broadcaster is focused on creating an ad tech solution this year to create a “fully automated and data driven system”, and that ITV is in discussions with third parties about how to deliver this.


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