Broadcaster decline accelerated in 2022, with record drops in reach and time spent. This was primarily driven by the lightest and youngest viewers leaving broadcast television while over-65s also reduced their viewing for the first time.

Loss of lighter viewers threatens the future viewing base of broadcasters and relevance to a new generation. Further, broadcaster status as the home of mass audiences becomes compromised.

However, retention of lighter viewers is not yet a lost cause. They are amongst the heaviest Netflix viewers, and the very lightest are spending more time in front of the TV set than previously—suggesting enduring appetite for TV-like content.

Microsoft’s planned acquisition of Activision Blizzard is in trouble. US, UK, and European regulators may make the deal impossible for Microsoft—and a disaster for Activision and the wider industry. 

Sony’s late improvement in PlayStation 5 sales is only just enough to reach its target numbers for the year. It needs a more dynamic approach to a rapidly changing industry, and a less dogmatic message to consumers and regulators. 

Netflix Games is more than a trial—it’s on track to become a major games platform. 

As Reed Hastings stepped aside as co-CEO, Netflix beat its (last ever) subscriber add forecast—7.7 million v. 4.5 million—leading to a revenue boost, alongside a gradually-widening profit margin. Forecasts for 2023 are positive, with the company seemingly past much of the tumultuousness of 2022.

With no metrics volunteered by management, we can assume that take-up of Netflix's nascent ad-supported plan has been predictably modest. To scale, the company must overcome several structural inhibitors.

With Netflix foreseeing future strain on subscriber additions, in time revenue growth will have to increasingly be inspired by paid-sharing initiatives and advertising—this will be detrimental to local content spend in minor markets.                                           

Structural shifts in the delivery of video are causing long-form viewing to coalesce around fewer programmes—this comes despite an explosion in the volume, spend and perceptual accessibility of content

For the time being this theoretically favours the largest of shows, along with the declining number of content providers that are able to create and distribute them at scale, forming critical masses of interest

Incoming technologies leveraging AI and virtual production will have the ability to drastically lower production costs. But until that happens the spend on most programming will become increasingly less efficient

A string of big, bold hits like Bodyguard, Killing Eve and Little Drummer Girl has reinvigorated the perception of the BBC’s drama schedule, with massive ratings and a coveted place in the public conversation

However, the lack of the broadcaster’s top dramas actually produced by BBC Studios—declining to just 4 of the top 25 in 2018—is cause for ongoing concern

At a time when the BBC is attempting to bulk up the iPlayer and programme IP has become the bedrock broadcasting asset, the BBC could be better placed  

With Comcast’s acquisition of Sky confirmed and Disney’s acquisition of 21st Century Fox on the path to regulatory clearance, how will the relationships of the various parties evolve?

Disney is betting on a standalone SVOD service in the US. However, its content deal with Sky in Europe is lucrative, and the performance of DisneyLife in the UK suggests its US strategy may not fit elsewhere.

Sky’s relationships with Disney and Fox are crucial to its business. A joint pursuit to maximise returns from IP and distribution in Europe would be economically efficient for both Comcast/Sky and Disney/Fox.

Linear TV is ageing, and the largest channels are ageing fastest. There is an ongoing double-whammy effect of a growing older population, and the loss of younger viewers to social media and SVOD services.

The PSBs are suffering more than most, especially the BBC channels. 31% of the population is aged 55+, but over 60% of viewing to BBC1 and BBC2 is by those aged 55+.

The trend can be halted, and even reversed to some degree. There is no inevitability to this ageing process, but it will take concerted efforts to fight it.

There has been no shortage of attention paid to declining TV viewing over recent years, but much of it focuses on overall viewing time rather than advertising delivery.

This is to overlook the engine driving most of the UK’s television industry. Commercial impact delivery has held up well relative to overall viewing, and is strong for certain key demographics.

Nonetheless there are generational and behavioural changes afoot which are exerting downward pressures on impacts, especially for younger audiences. An archipelago of Love Islands is needed (Stranger Things have happened).
 

Despite significant changes in people’s video viewing habits over the last few years, the TV platform landscape has appeared to have reached an equilibrium.

We expect pay-TV to retain its utility status for most existing customers. At the margins, movement from Sky and Virgin Media to free-to-air or pay-lite services will be mitigated by population growth.

The excitable growth phases for Netflix and Amazon are likely to be over, but they have carved out prominent positions in the market. Meanwhile, the uncomplicated allure of free TV remains strong for half the UK.

The TV, the main screen in the house, is rapidly becoming connected to the internet, opening a new front in the battle for people's attention

Tech players, pay-TV operators, and manufacturers are all aiming to control the user interface, ad delivery and data collection, leaving incumbent broadcaster interests less well represented

To protect their position, and the principles of public service broadcasting, broadcasters will have to work with each other at home and in Europe to leverage their content and social importance