Preparing for change – what will drive futuregrowth?DCMS content seminar, 16 July 2012
Incentives to invest in content are based on avirtuous circle inherited from an analogue environment                      ...
Increases in TV sector revenue have largelybeen driven by pay TV subscriptions  • Changes in technology, regulation and di...
Total TV network spend 2007-2011Industry spend isrising, and hasdone soconsistently for anumber of years…   PSB network pr...
The discovery and navigation of content is keyto future levels of disruption•     To date, the PVR has tied on-demand view...
Online distribution and take-up brings bothopportunities and threats to the growth of content investment      IP distribut...
Linear TV minutes have been resilient for thelast decade in the face of strong disruptive winds• Despite all of the change...
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Chris Woolard, Ofcom, Preparing for change – what will drive future growth?

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Chris Woolard of Ofcom: presentation on "Preparing for change – what will drive future growth?" given at the TV content seminar, Driving investment and growth in the UK’s TV content industries, 16 July 2012. More information at http://dcmscommsreview.readandcomment.com/tv/

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Chris Woolard, Ofcom, Preparing for change – what will drive future growth?

  1. 1. Preparing for change – what will drive futuregrowth?DCMS content seminar, 16 July 2012
  2. 2. Incentives to invest in content are based on avirtuous circle inherited from an analogue environment Investment in content Scale investment in high quality UK-originated content Revenue Viewing Perceived benefits lead to Significant reach and scale ad revenues / public large audience share funding The success of the current content system is a result of these three interlinking factors – but future developments in the industry may challenge this virtuous circle. 2
  3. 3. Increases in TV sector revenue have largelybeen driven by pay TV subscriptions • Changes in technology, regulation and distribution have enabled a range of new models to generate income from content exploitation (including VOD, PPV, TV shopping, sponsorship etc) • However, they remain small relative to advertising, subscription and the licence fee and are complementary to these sources rather than representing a viable alternative income stream Sources of revenue for the UK TV industry – 2010 Although small, this is the only element that is forecasting significant growth Subscription Net Advertising Licence fee revenue Revenue allocated to International £4.8bn £3.5bn TV £2.7bn exports NAR vs. other £1.4bn non- subscription revenue 2009 Total non- Pay-per-view Other public TV broadcast Interactive Other Sponsorship Note: Size represents (£48mn) funding shopping revenue relative revenues (£53mn) revenue (£178mn) (S4C) (£190mn) £713mn (figures are indicative) (£125mn) (£102mn)Source: Ofcom CMR, PACT/UKTI, Oliver&Ohlbaum 3
  4. 4. Total TV network spend 2007-2011Industry spend isrising, and hasdone soconsistently for anumber of years… PSB network programme spend; by channel 2006-2011 …but this is mainly driven by growth in pay TV (particularly sports and films) – PSB spend is dropping 4
  5. 5. The discovery and navigation of content is keyto future levels of disruption• To date, the PVR has tied on-demand viewing to My-PG: linear discovery and linear distribution. In a TiVo interface, or an app-style EPG, this need no longer • Display of ‘favourite shows’ based be the case. on viewing behaviour.• Here are three alternative EPGs which could disrupt funding, audiences, or regulation: • Already occurring in devices (e.g. TiVo). The App-PG: The Social EPG: • Nascent evolution, but social media apps may allow • Apps fully understood by users sort channels based on recommendations. consumers due to smartphone and tablet take-up • Use of apps by both content providers (OTT services) and platform operators is increasing. 5
  6. 6. Online distribution and take-up brings bothopportunities and threats to the growth of content investment IP distribution enables… …increasing accessibility to over-the-top subscription VOD …the opportunity for new contentservices, giving content creators the opportunity to drive additional creators to enter the market via viewing and new areas of revenue. established services Youtube’s ‘Original Channels’ project provides funding to producers in order to create original content. …but also raises potential issues… Intellectual property – the Online copyright infringement cross-jurisdictional nature of IP - has the potential to affect delivery could make appropriate revenues and subsequent remuneration more difficult (see investment recent EU proposals on music) 6
  7. 7. Linear TV minutes have been resilient for thelast decade in the face of strong disruptive winds• Despite all of the changes to Average Linear TV Minutes Consumed UK television in the past 8 (BARB) years, linear viewing 250 minutes have proved remarkably resilient. 200• It should be noted that before the BARB panel 150 changed in 2010, linear viewing had experienced a 225 100 220 218 216 212 212 215 212 220 3.6% decline in minutes.• A further fall of 2.2% was observed between 2010 and 50 2011 which should be followed closely in 2012. 0• However, as far as 2003 2004 2005 2006 2007 2008 2009 2010 2011 advertisers are concerned, Linear TV Minutes (BARB) people are watching as Other TV Viewing (BARB, Enders, Infosys) much linear TV as in 2003. N.B. New BARB panel introduced 2010 which means comparisons with previous years (including trends) should be treated with caution. 7

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