Subscriptions to online video services such as Netflix in the United Kingdom have surpassed those for traditional television for the first time. Or have they? Across all video viewing, which is around five hours a day on average, subscription video accounts for 18 minutes, rising to 30 minutes day for those aged 16-34, with a third of their viewing on devices other than a television set.
The numbers come from a new Media Nations report from Ofcom, the United Kingdom communications regulator.
It makes for great headlines but it is worth unpacking the numbers.
In the United Kingdom, subscriptions to the three most popular online streaming services, Netflix, Amazon Prime and NOW TV, reached 15.4 million in the first quarter of 2018, overtaking the number of television subscriptions at 15.1 million, out of a total of 28 million television homes.
These figures are based on BARB Establishment Survey data, according to which the total number of subscriptions to Netflix, Amazon and NOW TV was 15.4 million.
However, that includes households with multiple on-demand services.
Netflix had 9.1 million subscribers in the first quarter of 2018, while Amazon had 4.8 million, that leaves NOW TV with 1.5 million.
The number of homes with at least one of these services is 11.1 million, or just under 40% of the country.
These three services are not entirely comparable. While Netflix is a pure online video subscription service, Amazon comes with a Prime shopping account, and NOW TV from Sky is effectively an unbundled pay television service available over broadband.
The BARB survey does not include NOW TV as a pay television subscription service, although Sky includes it in its subscriber data.
The BARB data is based on a continuous survey of around 53,000 households a year, carried out by Ipsos MORI.
A separate survey, the GfK SVod Tracker, based on around 3,000 respondents, indicates that 29% of those subscribing to online video services have both Netflix and Amazon, while 12% have Netflix, Amazon and NOW TV.
The majority of them also have a traditional pay television service, with 71% also subscribing to traditional pay television.
Netflix is available in conjunction with Virgin Media and BT, and will be available with Sky. BT has announced plans to offer access to Amazon Prime Video through its YouView boxes.
So have online video subscriptions overtaken pay television? Not really. Not yet.
Anyway, moving on. What about revenue?
Television subscription revenue declined by 2.7% in 2017 in real terms, although at £6.4 billion it accounted for 57% of all commercial broadcast television revenues.
Ofcom estimates online subscription revenue to have grown by 35% to £895 million, based on data from Ampere Analysis and Zenith Media. That is about 14% of the value of television subscriptions.
So has online subscription video revenue overtaken that for pay television? No. Not even close.
Turning to viewing, of the average 5 hours 11 minutes of video that individuals watched per day, 71% originated from broadcast television, and 58% was watched live on the television set. Subscription video services accounted for an average of 18 minutes per day. Broadcaster video services, like iPlayer and ITV Hub account for an average of just 9 minutes per day, with just 3 minutes of that viewed on devices other than the television.
Those aged 16-34 watch a similar amount of video to other age groups, at 4 hours 48 minutes a day, including about an hour and half of live television, but 54% of their viewing does not originate from broadcast television and 34% of their viewing is on devices other than a television set. This group spends an average of just under an hour a day on YouTube. For them, subscription video services account for 30 minutes a day of viewing, while broadcaster video services represent just 11 minutes a day.
So has online subscription viewing overtaken that for broadcast television? Not remotely.
However, it is clear that there is a change in viewing, particularly among younger viewers.
Overall, the amount of time spent viewing broadcast television on the television in the United Kingdom has fallen for the sixth successive year, from just over 4 hours in 2010 to 3 hours 23 minutes in 2017. That is still a total of 4.41 trillion minutes of broadcast television viewing.
Only 64 programmes had an audience of more than 10 minutes viewers in 2017, compared to 253 in 2010.
Those aged over 54, who make up 28% of the United Kingdom population, account for more than half of all broadcast television viewing.
The sharpest declines in viewing are among children, aged 4-15, down from 151 minutes a day in 2010 to 86 in 2017, and young adults aged 16-24, down from 169 minutes to 100 minutes a day.
Only 78% of those aged 16-24 now watch television for at least 15 consecutive minutes a week.
Sharon White, the chief executive of Ofcom, said the research has profound implications for television in the United Kingdom.
“We have seen a decline in revenues for pay TV, a fall in spending on new programmes by our public service broadcasters, and the growth of global video streaming giants. These challenges cannot be underestimated,” she said.
“UK broadcasters have a history of adapting to change. By making the best British programmes and working together to reach people who are turning away from TV, our broadcasters can compete in the digital age.”
Ofcom, which now regulates the BBC, as well as other broadcasters licensed in the United Kingdom, has repeatedly signalled sympathy towards the public service broadcasters working together to offer online video services.
Such an initiative has been called Kangaroo two, after an earlier joint venture was blocked on competition grounds.
The first annual Media Nations report is available from the Ofcom web site, together with a useful interactive data tool.