Online streaming services like Netflix and Amazon Prime Video have officially grown more popular than traditional pay TV services like Sky and Virgin in the UK for the first time, Ofcom has revealed.
The media regulator says that UK subscriptions to the three most popular subscription video on demand (SVoD) services − Netflix, Amazon Prime and Now TV − hit the 15.4 million mark in Q1 2018, overtaking the number of pay-TV subscriptions, at 15.1 million.
It’s a huge milestone that shows just how much TV viewing habits have changed over recent years. And it appears there are three main reasons for the shift.
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“The high level of investment in original content by Netflix and Amazon Prime Video… is driving subscriptions, with more than a third of Netflix (38%) subscribers in Q1 2018 citing ‘to watch original series made by the provider’ as a reason for signing up, up from 30% in Q1 2017,” Ofcom’s Media Nations 2018 report says.
The most common reason for subscribing to Amazon Prime Video, meanwhile, is that it comes with the added bonus of free shipping.
“More than a quarter (28%) of Now TV users stated that they used NOW TV as it was cheaper than pay TV, up 12 percentage points from 16% in Q1 2017, driven in particular by 35-54 year-olds (19% in Q1 2017 to 30% in Q1 2018),” the report adds. “Similar increases were found for Netflix (12% to 21%) and Amazon Prime Video (9% to 10%).”
However, the majority of SVoD subscribers (71%) also subscribe to a traditional pay-TV service, possibly due to live sports.
But, as the report points out, Amazon, other SVoD services and social media sites like Facebook are working to secure live sports streaming rights. Prime Video, for instance, recently secured Premier League and US Open tennis rights.
Piracy tracking firm MUSO, however, believes the shift to online streaming unofficially happened a long time ago.
“What these figures from Ofcom don’t take into account is the many hundreds of thousands of people who are streaming TV in the UK through unlicensed services and sites,” said Chris Anderson, the head of film and TV at MUSO.
“In reality, with piracy figures considered, streaming probably overtook traditional TV long ago − but piracy audiences are overlooked by TV broadcasters, streaming services, and regulators to their detriment.”
According to MUSO, global piracy has increased year-on-year, with the firm recording 4,776,616,717 total visits to film and TV piracy sites in the UK in 2017 alone. “Finding ways to access this audience could be the secret to bringing higher profits back to broadcasting,” Anderson added.
The Ofcom report also found that the BBC, ITV, Channel 4 and Channel 5’s £2.5bn combined spending on original, UK-made programmes in 2017 represented a record low. They spent almost £1 billion more on original programming back in in 2004 − a peak figure of £3.4 billion.
Netflix and Amazon, meanwhile, are expected to spend around £5 billion and £3 billion respectively on original content this year.
“Today’s research finds that what we watch and how we watch it are changing rapidly, which has profound implications for UK television,” said Sharon White, Ofcom’s chief executive.
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“We have seen a decline in revenues for pay TV, a fall in spending on new programmes by our public service broadcasters, and the growth of global video streaming giants. These challenges cannot be underestimated.
“But UK broadcasters have a history of adapting to change. By making the best British programmes and working together to reach people who are turning away from TV, our broadcasters can compete in the digital age.”
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