The Guardian

ITV late to the table as it lays £800m streaming bet

Mark Sweney

‘ITV is desperately in need of some good news. They have tried but never found that silver bullet’

Alex DeGroote Media analyst

With England facing Senegal in the last 16 and the prospect of maybe, just maybe, broadcasting a quarter-final World Cup clash, the mood at ITV traditionally becomes one of highfives and talk of bonuses as national fervour turns into advertising gold.

But this time there is much more at stake as the broadcaster rolls out ITVX, an £800m-plus bet on a national streaming champion fit for the Netflix era, with executives glued to screens hoping it will not prove to be a digital own goal.

The existing ITV Hub service has an embarrassing history of live-streaming crashes at key moments during football matches of national importance, but another failure would have repercussions far beyond angry fans complaining about frozen screens.

“This is the most ambitious rollout ever in British streaming in terms of its complexity,” says Rufus Radcliffe, the managing director of streaming, interactive and data at ITV. “We have dashboards all over the place and will see the sudden ramp up as viewers come online to watch. We will have very big streaming numbers for Senegal, and exponentially bigger if England get to the quarter-finals; it is a big deal for ITV.”

As Carolyn McCall approaches her fifth year of running ITV, it continues to languish at a market value 60% below when she started. The chief executive is banking on the streaming revolution for a change in fortune.

The problem is that whether or not ITVX passes the World Cup test, the competition for eyeballs appears to have already come to an abrupt end in the streaming world.

Netflix’s once-indomitable share price has more than halved this year, while Disney, which has felt the need to bring back its former chief executive Bob Iger to rebalance its streaming ambitions, has had almost $260bn (£211bn) wiped off its market value.

The story is the same across the media landscape: shares in Sky’s owner, Comcast, which runs the Peacock streaming service, are down a third; Channel 5’s owner, Paramount, is down 42%; and the market value of Warner Bros Discovery has more than halved.

In March ITV took a major share price hit as investors balked at plans for a huge streaming investment immediately after Netflix warned the pandemic-fuelled streaming boom was fizzling out. Nevertheless, it is planning on investing more than £800m trying to make ITVX a must-watch service over the next four years.

ITV says it will spend £65m on ITVX this year, £195m next year and then £185m annually – including a £160m content budget in each of 2024, 2025 and 2026.

“Without exception there has been a streaming bloodbath,” says Alex DeGroote, an independent media analyst. “ITV has entered this party late and spending this much feels like a moment in time that has passed.”

ITV is a linear TV juggernaut when content is broadcast in real time via the airwaves and cable. It is home to 93% of the highest-rating programmes on commercial TV in the UK, including I’m A Celebrity … Get Me Out of Here and Love Island, driving a record haul of almost £2bn in ad revenues last year.

But management is acutely aware that a big bet needs to be made on the digital future. Viewing figures of its TV channels declined 11% last year and if there is one advantage to being a late mover, it means avoiding the expensive lessons gleaned from the fall from grace of the big US media and streaming companies.

"I wouldn't say ITVX is make or break for McCall and ITV but I think it needs to succeed,” says DeGroote. “It will be a long decline, but linear TV is in terminal decline. ITV is in desperate need of some good news. They have tried lots of things but never found that silver bullet.”

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2022-12-03T08:00:00.0000000Z

2022-12-03T08:00:00.0000000Z

https://guardian.pressreader.com/article/282333978931737

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