The traditional UK TV industry is at risk of losing £1bn to digital disruptors, a new report has warned.
Broadcasters including ITV and Sky currently enjoy an estimated profit margin of £1bn on revenues of £14-15bn a year, according to OC&C’s ‘To platform, or not to platform?’ report.
A further £2bn could be at risk if they “eventually distribute the lion’s share of TV content in the UK over the internet, enabling them to own the viewer relationship, and as such control distribution and marketing”.
“Viewers are facing a complex web of different routes to access TV content, leading to an unsustainable level of confusion and inconvenience,” Mostyn Goodwin, a partner at OC&C Strategy Consultants.
This environment is giving rise to the need for a super-aggregator service that provides a universal access point to content, a better search function and single point of billing.
As we have already seen with the newspaper industry, however great for consumers, these platforms have caused significant problems for the industries they disrupt and aggregate.
If this also happens in TV, the UK broadcast industry’s £1bn profit could be put at risk.
The report noted that broadcasters now face important choices on how to address the challenge, “from syndicating their channels to independent platforms, to opening their own online offerings to third party channels and becoming ‘platforms’ themselves”.
The OC&C report warned that a limited number of broadcasters will be able to “go it alone” and so many will need to think about establishing partnerships.
Goodwin added: “This is a long-term issue that may lead broadcasters to find their profit, prominence and ultimately their existence under threat from disruptive aggregators.
“This has been seen many times before. So, it is critical that channels decide early what their role in the TV industry should be, and how to work with – or against – the platforms to safeguard their own future.”