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/

1. Preparing for change – what will drive future
growth?
DCMS content seminar, 16 July 2012

2. Incentives to invest in content are based on a
virtuous 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.
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3. Increases in TV sector revenue have largely
been 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
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4. Total TV network spend 2007-2011
Industry spend is
rising, and has
done so
consistently for a
number 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
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5. The discovery and navigation of content is key
to 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.
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6. Online distribution and take-up brings both
opportunities and threats to the growth of content investment
IP distribution enables…
…increasing accessibility to over-the-top subscription VOD …the opportunity for new content
services, 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)
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7. Linear TV minutes have been resilient for the
last 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.
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