A drop in Studios' revenue—attributed to phasing of content deliveries and strikes— saw ITV's external revenue down 6% to £727 million in Q1. An improvement in advertising could not offset this drop but H2 will be better for production and see Studios flat for FY 2024 

After big launch momentum, the growth of ITVX appears to be slowing, while the service's release strategy continues to evolve

ITV’s total advertising revenue (TAR) was up 3% in Q1 to £432 million (2023: £419 million). H1 is forecast to be up 8%, with Q2 up 12%, buoyed by the Euros which start in June

As guided, ITV’s advertising performance was down 8% year-on-year (£1.8 billion), while Studios performed slightly better than expected (+4%, £2.2 billion): meaning that adjusted EBITA, while challenged (-32%, £489 million) could have been worse given the trials of H1

Unsurprisingly, ITV has announced an acceleration of its cost-cutting measures which intensifies an earlier hiring freeze: costs have risen 19% since before COVID, while revenues are only up 10%

ITVX continues its strong growth, and although we think that this needs to be contextualised, there are unintended but encouraging signs for the broadcaster

As viewing moves online, broadcasters’ on-demand players make up a growing proportion of viewing, becoming central to their future strategies.

However, even though SVOD viewing might have begun to plateau, BVOD growth cannot yet balance the decline of linear broadcast.

Of this shrinking pie, 2023 saw most of the major broadcast players increase their viewing shares.

Disney's bottom line results were flattered by a year-long cost cutting drive: the decline in linear entertainment revenue is accelerating and direct-to-consumer subscriber growth has temporarily stalled.

A new sports JV with Warner Bros. Discovery and Fox, along with other announcements are designed to grab attention in midst of turbulent shareholder rebellion.  Disney also—at last—unveiled a new games initiative with a $1.5 billion equity stake in Epic Games and a major immersive universe to attract younger audiences.

Disney's approach to the licensing of content to third parties is nuanced and so will be its effect on the perception of Disney+'s exclusivity.

As more viewing is delivered on-demand and online, the jeopardy and immediacy of sport make it one of the few genres which will remain overwhelmingly live.

Shared national experiences that allow as wide an audience as possible to follow simultaneously are increasingly rare in a fragmented media landscape, and public service broadcasters are still the only media capable of providing them.

The listed events regime should not just be protected but at least extended to include live digital rights: although the vast majority can presently access these events via DTT, changing viewing habits, eventual DTT switch-off and a shift in how rights are packaged means that action should be taken now to guarantee continual full, free availability.

ITV’s total advertising revenue (TAR) across the first nine months was down 2% year-on-year, £25 million less than the company had expected at the end of July. This was still up on pre-COVID levels. With a strong Q4, TAR is expected to be down 1.5% across the year, while high inflation of costs and greater reliance on Studios will ultimately challenge margins

ITVX will be fully launched on the—slightly delayed—date of 8 December 2022. We are confident that it will be a step change for ITV's online engagement, however we believe that ITV may be understating its potential cannibalisation of linear

ITV Studios appears to be beating the market, and there may never be a more opportune time for its mooted partial sale: across the industry inflation will make margins difficult to grow while overall content demand is plateauing at best 

With major studios arguably over-indexed on SVOD, the stickier experiences of interactive entertainment and the metaverse will eventually form a critical pillar of studio D2C strategy, boosting subscription services and tying in closely with consumer products and theme parks.

Disney’s appointment of a Chief Metaverse Officer is good first step, demonstrating a strategic interest in the space. But other major studios remain cautious and distracted, with limited capability beyond licensing to engage in the metaverse for the next 24 months and possibly longer.

Meta will need to provide a strong guiding hand creatively and technically to ensure its new partnership with NBCUniversal is a success, and to evangelise the metaverse and its revenue model across the Hollywood studio content space.

Whether to allow a Vodafone/H3G merger is essentially a trade-off between range of consumer choice and costs of network duplication. With the need for the former diminishing and the latter increasing, the case for approval is strengthened.

H3G is in a negative spiral of small scale, low investment, and low returns. A merger would allow it to form part of a more credible competitor with a transformed returns profile—without rising prices or reduced industry investment levels.

The CMA’s aversion to mergers has been very stringent of late—an approach that risks deterring investment and compromising competitiveness. Consolidation in UK mobile is unlikely to happen without a change of mindset.

FAST services that include digital linear channels (FAST channels) appear to be experiencing solid growth in the US. In the UK, this success has been used to highlight a potential mechanism to diversify away from broadcast linear and SVOD

However, the growth potential of these services on this side of the Atlantic contends with a very different video market than the US—the free output of the PSBs remains prolific and of high quality, while prominence legislation is likely to tougher

Furthermore, overall viewing of long-form video content is declining. Any new FAST services will be fighting for a declining amount of screen time with poor content slates and little name recognition—however, growing demand for US content is an advantage

The pandemic years boosted many businesses selling services on subscription in the UK: work-from-home gave people more time and money to widen the services they enjoyed in the home, such as gaming, entertainment and music, also boosting engagement with trusted news

The cost-of-living crisis dented the number of subscribers to OTT SVOD and news services in Q2 2022. Broadband and mobile are must-have; bundles of services (e.g. Sky’s pay-TV and broadband or mobile) are more resilient; yearly and multi-year contracts prevent churn relative to monthly contracts; and services that cater to passions (e.g. football) are always need-to-have

Subscription (or supporter) media and news services reaped the demand for trusted news through the pandemic, but now face a tough challenge to their toplines from the economic downturn—and also to transition to a sustainable business model for media audiences, while advertisers are also feeling the heat