For a few years now people have been saying that the internet will be the death of conventional television. The argument seems to be that people won’t bother watching TV, much of it littered with advertising, when they can get better content on the internet; free, and with little – if any – advertising. Not only that, but the internet means that you’re not restricted to watching whatever’s on at a given time. Instead, everything that you want to watch is available at your fingertips, whenever you want it. I’m not so sure this argument stands up, though. The TV channels, to put it simply, are fighting back.
On Monday the news arrived that ITV had bought independent production company Mammoth Screen. You’ve probably never heard of it, but it’s responsible for hit dramas such as Poldark and Parade’s End. The move is part of a string of acquisitions by the TV channel, starting in 2012 with Gurney (the company behind hit US show Duck Dynasty) and continuing throughout the previous two years with The Garden (24 Hours in A&E) and High Noon Entertainment (Cake Boss). More recently, ITV bought Talpa Media, the Company behind The Voice, for £355m, and tabled a £600m bid for the TV production arm of The Weinstein Company. ITV isn’t simply buying up its supply chain. Rather, it’s following chief executive Adam Crozier’s acquisitive plan to diversify in the face of declining viewer numbers.
So far it’s working. In March the company reported that pre-tax profit was up 23% to £712m, hence why it can acquire other companies so easily. The plan hinges on the idea that, in the new television landscape, content is king, as it can not only be used to raise money from advertising but can be sold abroad and to streaming services like Netflix. It’s certainly working for ITV, as the company’s production arm, ITV Studios, saw revenues increase 9% to £933m.
Sky seems to be taking a similar approach. Having unified its British, German and Italian businesses last year, last week it announced plans to create artistic content from a central hub in Milan that can be shown across Europe. The decision allows Sky to compete with Netflix and the like by creating its own shows that it can then broadcast exclusively to Sky customers. Netflix is, of course, one of the major reasons why the contemporary TV model is changing. At the moment Netflix is by far the biggest fish in a relatively small, but very lucrative, pond, which it is growing through its aggressive international rollout. Its success has come, in no small part, because of the impressive content that it has produced. With Apple poised to enter the sector, though, Netflix could be about to face some serious competition.
The TV Channels have now, of course, all got their own on-demand streaming services, and these have only grown in popularity since the advent of smart TVs and set-top boxes that allow them to be streamed straight to a television screen. I think all of this will be good news for the end user. Competition between broadcasters and production companies will lead to even better original content, while more streaming services will mean that Netflix might be forced to compete on price. There will be a battle to license the best shows from the broadcasters, which will benefit the streaming services’ customers as well as the TV channels.
What else do you think the broadcasters can do to ensure their survival? Let me know at moira@thembsgroup.co.uk and have a great weekend!