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BritBox is Coming, BritBox is Coming . . . to the UK

On Wednesday, February 27th, the UK’s largest broadcasters, BBC and ITV confirmed that they will launch BritBox, an SVOD service, in the UK in the second half of 2019. It is a homecoming for a service that both companies initially launched in the US in 2017 and now has more than 500 thousand subscribers in both the US and Canada.

Like the North American service, BritBox UK will feature “box sets” (i.e. full seasons) of current and past TV series, including beloved shows like Doctor Who (BBC) and Broadchurch (ITV). In addition, original content, to be commissioned from British production companies, will also be a key part of the offering.

The initial program providers will be ITV and BBC, with hopes that the other two Public Service Broadcasters, Channel 4 and Channel 5 (owned by Viacom) will join. ITV has already announced that it will be committing £25 million in 2019 and £40 million in 2020, with £0 million in 2021 and 2022. The financially challenged BBC has not yet announced its investment plans. No details were provided as it relates to pricing; although it is assumed that the monthly fee will be less than the £7.99/month that Netflix charges.

Why It Matters

Like broadcasters in the US, UK broadcasters continue to experience declines in live viewing with increasing video consumption on SVOD services like Netflix, Amazon and Now TV (a Sky SVOD service). 

This increase is illustrated in the chart below from The SVOD Report, published in January 2019 by BARB, the “Nielsen” of the UK. The 11.6 million subscribers referenced in this report represent over 43 % of the total UK TV households. Launching BritBox can be viewed as a necessary and needed response to changing video consumption habits

Both the BBC and ITV also believe there is a market opportunity. While all of the three leading services feature British-produced programming, most notably The Crown on Netflix, there is currently no SVOD service in the country exclusively dedicated to high quality UK programming.

In the ITV earnings conference on February 27th, CEO Carolyn McCall emphasized that there is a “clear” gap in the SVOD market for quality, British content. In addition, per McCall, the service is “complementary to Netflix because it’s doing a different thing.”

What You Need to Focus On

BritBox is not the first attempt on the part of the UK broadcasters to launch an SVOD service. In 2007, five years before Netflix launched in the UK, ITV, Channel 4 and BBC Worldwide collaborated on Project Kangaroo, which was to be a UK-focused SVOD service.

Often dubbed the “UK Hulu”, the service was ultimately blocked by the Competition Commission in 2009 on the grounds it would reduce competition and harm consumers. Ten years later, UK broadcast executives recognize that BritBox will require regulatory review, but are optimistic that it will not be shut down given the changes in the marketplace. Sharon White, the Head of Ofcom (the British “FCC”), has publicly called on the UK broadcasters to collaborate on building a common SVOD platform.

The bigger challenges facing BritBox will revolve around being distinct enough and funding.

On the distinct enough front, BritBox will not be like Hulu in the US which has provided a centralized hub for catching up on current US series from three of the four major networks.

Instead, each of the UK broadcasters maintain their own catch-up service – the BBC iPlayer, the ITV Hub, All 4 (Channel 4) and My 5 (Channel 5).

Outside of the BBC, for which each household pays £ 150.50 per annum, the base catch-up services are free and frequently used by TV viewers. ITV+ has a commercial free pay offering (£ 3.99/month) with All 4 to start offering a commercial free service for the same price. My 5 in the meantime is announcing new partnership deals to improve its overall offering.

BritBox will need to have a compelling array of library content at the outset to garner customer interest as it will effectively be competing against All 4, My 5, and the British content that Netflix and Amazon will continue providing until license terms expire.

On the funding side, original content investments cannot be done on the cheap. In September 2018, Pact, the UK trade association of independent content producers, reported that Amazon and Netflix had collectively spent over £150 million on original content in the UK in the prior year.

While ITV management emphasized that original content will be a critical feature of the service, its initial £ 65 million commitment to the service over the next two years plus whatever the BBC contributes will be likely far less than what Netflix and Amazon are spending annually.

In addition, Netflix and Amazon are both increasing their production budgets in England, which will lead to competition for production talent. BritBox’s ability to develop compelling original content as well as fund it will be critical to its success.