ITV, the largest commercial broadcaster in the United Kingdom, will move to a new online video platform, integrating advertising and subscription funded services, to be called ITVX. The freemium offering will combine the current ITV Hub and BritBox services and will launch in the fourth quarter of 2022. The broadcaster will premiere much of its new programming online, to be shown many months afterwards on its traditional television channels. The news was announced as ITV published its annual results, prompting the market value of the company to fall by a quarter in a day.
Viewers will be able to watch new programmes for free, with adverts, ranging from dramas, documentaries, comedy and reality shows to movies and American series.
Many major new drama series will be available online for six to nine months before they are broadcast.
All the drama and comedy programmes that ITV commissions, and most reality series, will be made available online for free as box sets, as soon as the first episode has aired on its traditional television channels.
There will be 150 movies on the service at any time, with 500 available over the first year.
There will be a subscription tier, for the price has yet to be announced, where all the free programming can be viewed, without adverts, as well as programmes from other partners.
Major events will be offered online at the same time as they are broadcast, including the forthcoming FIFA World Cup, I’m A Celebrity and the Love Island Final.
In addition, there will be ‘pop-up’ channels available online, allowing viewers to watch themed programmes from a playlist one after another. There will be 20 such channels available at launch, with a new one available every week.
The BritBox service in the United Kingdom, which has around 730,000 subscribers, up by 45% in a year, will be folded into the ITVX proposition as part of the subscription tier. Britbox in the United Kingdom made a loss of £61 million in 2021, slightly up on a loss of £59 million the year before. ITV confirmed that it has bought out the 10% stake owned by the BBC for a “nominal amount”, adding that the BBC was “extremely helpful and supportive”.
BritBox international, which remains an equal joint venture with the BBC, has 2.4 million subscribers across the United States, Canada, Australia and South Africa, with plans to extend to Nordic countries in the first half of 2022 and the relatively modest aim is to grow that to 10-12 million by 2030.
Carolyn McCall, the chief executive of ITV, said that ITVX will provide a simplified and seamless experience.
“We are supercharging our streaming business, fundamentally shifting our focus to think digital first, as well as optimising our broadcast channels, by continuing to attract unrivalled mass audiences,” she said. “In doing so we are responding to changing viewing habits, but also the evolving needs from our advertisers. This will enable ITV to continue to be both commercial viewers and advertisers’ first choice.”
Kevin Lygo, the managing director of media and entertainment for ITV, said that broadcast channels remain important for bringing viewers together for a shared television experience. “However, we know we have to deliver our programmes to as many people as possible in all the ways they want to watch them, and going forward viewers will now see a wide array of shows premiering first on ITVX, which is the cornerstone of ITV’s digital acceleration.”
ITVX, presumably for extra or exclusive, eschews the more popular ‘plus’ label, or at least adds a slight twist, but runs the risk of confusion with rather more adult programming.
The announcement came as ITV published its full year results for 2021. Total external revenue was £3.45 billion, up 24% on the previous year, which was hit by the pandemic. Statutory profit before tax was £480 million, compared to £325 million the year before.
Total ITV viewing was down by 9% at just over 15 billion hours, of which a billion hours were online, or less than 7%. ITV expects to double online viewing to 2 billion hours a year by 2026.
ITV has the largest advertiser funded premium online video service in Europe by revenue, with 9.6 million monthly active users, an increase of 1.5 million on the previous year. That includes just over half a million Hub+ subscribers, who pay to avoid adverts.
The company plans to at least double its online revenues to £750 million by 2026, and to double online viewing, monthly active users, and subscribers.
ITV will increase its investment in programming, from £1.23 billion in 2022 to around £1.35 billion in 2023. This will include online-first programming investment of £20m in 2022 and £160 million in 2023 for ITVX.
Ongoing online investment in technology and delivery is around £25 million and there will be launch costs of £20 million in 2022 and £10 million in 2023.
ITV had subscription revenues of £42 million in 2021, across ITV Hub and Britbox, making an operational loss despite having access to a vast catalogue of programmes, the production of which was funded from its traditional television business.
This demonstrates the challenge that ITV is facing. It is a dominant commercial broadcaster in its home market, providing over nine out of ten of the top 1,000 programmes on commercial channels last year. Yet it is a comparatively small player globally.
Even in the United Kingdom, ITV has managed to sign up only 1.2 million subscribers, compared to Netflix with 16.8 million and Amazon with 12.6 million, although Prime members receive other benefits including free delivery on some orders.
In comparison, Netflix is expected to spend over £14 billion on programming this year and Amazon is believed to be spending almost £10 billion. The top media and technology companies will spend a total of over £100 billion on programming in 2022.
For ITV, the transition to an online-first strategy is a difficult balancing act. The broadcaster is placing a big bet that viewers will go online to watch programmes there first and that this will not devalue its traditional channels. The relatively small numbers of homes that have chosen to subscribe to ITV Hub+ or Britbox so far suggests that this will remain challenging, in a world that is increasingly dominated by global players with bigger budgets.