Kate Bulkley, Media Analyst.

Digital media is starting to bite

By Kate Bulkley

Broadcast News

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For Broadcast June 08, 2017

Creative solutions are needed to combat declining linear audiences

I have a confession: I didn’t actually watch the Britain’s Got Talent final on ITV on Saturday. However, I wasn’t alone because neither did millions of other people; this was the lowest-rated BGT concluding episode in a decade, with 8.2 million.

Yes, the show was moved forward a day because of the One Love Manchester benefit concert on BBC1 and, despite that, it still peaked at more than 10 million. In 2009, however, BGT drew an astonishing 17.3 million, thanks to Susan Boyle’s blockbuster appearance.

Cue title sequence: The Mystery of the Disappearing Mass Audience. Enders Analysis has produced a graph that shows these declining audiences over time.

It’s the kind of thing that gives you pause: 157 ITV programmes averaged 10 million-plus in 2010, but only 24 managed the same feat last year – that’s an astounding drop over six years.

In this context, BGT’s decline underlines what might be called the long, slow death of mega audiences on British television.

This has been going on for years, spurred by the advent of so many more channels, but if the likes of BGT can’t get more than 10 million, what hope does the rest of British TV have, outside of one-off events like the Manchester gig?

For the BBC, not delivering big audiences becomes a cudgel in the next round of licence fee negotiations, while ITV’s whole business model is built on money from advertising, and everyone loves a show with high viewership.

ITV’s first quarter trading statement put a marker in the sand: after a 9% fall in ad sales in the first three months of 2017, the broadcaster forecast an 8-9% drop in the first six months of the year, with June alone expected to be down 15-20% from last year.

Last year’s Euro football championship makes the year-on-year comparison imperfect, as does financial uncertainly from Brexit. But the writing is on the wall: the way people are consuming TV is changing and this has implications for audiences and ad money.

With a smaller number of big shows, demand from advertisers for mass audiences is higher. But the data-rich reach of digital online video, both from broadcasters’ VoD services and the likes of YouTube and Facebook, is growing rapidly.

The longer-term impact is that TV is becoming less attractive to advertisers, and that puts downward pressure on nonadvertiser revenues.

Adam Crozier’s last few months as ITV chief executive will be remembered for a signifi cant move: ITV Hub+ became part of the Amazon Channels offering. For £3.99 per month, Amazon Prime subscribers can watch ITV shows, adfree.

A big part of Crozier’s transformation plan was to build up non-advertising revenues. Today, this accounts for more than half. The move to join Amazon Channels is about tapping other revenues, especially in the pay-TV space.

It’s also about following younger audiences and ensuring that if the new Amazon Channels video bundle takes off, ITV is there.

Enders’ 2010 to 2016 comparison shows that 19% of 16-34s made up the TV viewing audiences seven years ago, but that figure dropped to 16% last year.

A massive older audience is the beating heart of the larger viewing numbers (even for BGT finals), but it’s the young ’uns that the advertisers want most of all.

A Deutsche Bank report confirms the “inexorable” shift of eyeballs and ad spend to online advertising, which is now twice as large as TV in the UK.

The UK is not alone. In Sweden and Denmark, in particular, video viewing online and on mobile is growing, especially for this younger demographic.

According to the bank, a far larger share of new ad budgets are being allocated to digital.

“This is not the ‘end of TV’,” it says. “Linear TV reach still vastly outguns digital media. But at the margins, digital is starting to bite.”

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