The UK's cultural industries remain the strongest in Europe and digital distribution is a strong vector for the globalisation of British culture

The international reach and reputation of UK news providers is unparalleled, with the BBC, the largest news provider globally, reaching half a billion users weekly

Independent commissioning drives a dynamic ecosystem of TV exports with global clout—worth an estimated £3.4 billion—that remains stable despite Brexit

Netflix dramatically missed its quarterly guidance of +2.5 million subscribers in Q1, losing 200k net subs globally (although that includes 700k lost due to pulling out of Russia). Q2 is forecast to see a further net loss of 2 million (of a worldwide total of 222 million), the causes of which will also hit Netflix’s competitors.

Netflix prices continue to rise, with the Standard tier now eclipsing £10 per month. However, despite the current strain on household finances the streamer can still be confident that it can charge more without material consequence—video remains cheap compared with the past, and more time spent at home will lift Netflix's value to subscribers.

The upcoming clampdown on password sharing will aim to dismantle the 'culture of free' that currently surrounds the brand. However, we foresee that the company can only target the low-hanging fruit, so as not to risk inflaming subscriber relations by tackling all behaviour outside the accepted Terms of Use.

Broadcast TV viewing resumed its downwards trajectory in 2021, following a pandemic-inflated boost in 2020. The effect has been compounded by streaming services retaining much of their lockdown gains, consolidating their place at the heart of people's viewing habits

Within the shrinking pie of broadcast TV viewing—still c.70% of total TV set use—the PSBs have held relatively steady, whilst Channel 5 has increased both its share and absolute volume of viewing

However, further decline seems inevitable, with the largest components of the programming landscape, namely longstanding formats and the soaps suffering badly since the beginning of the pandemic. We await the effect of various new scheduling strategies

As part of the House of Lords Communications and Digital Committee inquiry into the future of BBC funding, Claire Enders gave oral evidence. Here we reproduce her accompanying slides.

The presentation highlights the reliance placed upon the BBC for information during the pandemic, and contextualises the value of the licence fee to consumers alongside the cost of other sources of news and entertainment. It further notes the significant proportion of viewers that lack the means, or do not wish, to pay for any video service beyond the cost of the licence fee.       

While a subscription model has been mooted as an alternative to the licence fee, recent volatility in the market has magnified concerns around the sustainability of the streaming model, and while growing penetration and investment in content by these services remains impressive, there is less certainty around the future plurality and distinctiveness of these platforms, and the related cost to subscribers.

Digital pioneer Viaplay has been leading NENT’s exemplary transition from linear to on-demand with sustained revenue and subscriber growth—unlike its pay-TV peers

These results have been leveraged to tell capital markets a Netflix-like equity story, underpinning ambitious growth targets to 2025 for the Nordics and new launches abroad, including the UK this year (albeit in low-key mode)

Expansion builds on a pivot to fixed costs originals and multi-territory sports rights. But, in highly competitive markets, we are sceptical of NENT’s capacity to generate the revenues necessary to breakeven with fast rising content costs

Channel 5 has been a rare recent success story in linear television, growing overall viewing and share while beginning to shake off the perception of being the home of cheaper, exploitative programming, consolidated under the ownership of Richard Desmond's Northern & Shell

The programming shift—most notably in investment in lower-price-point British drama—has been made possible with savings from axing schedule centerpieces Big Brother and soon, Neighbours. However, this will result in continued declines in 16-34 viewing share

The other channel brands of Paramount Global (formerly ViacomCBS) are in a gradual downswing: My5 is subscale, while Pluto TV makes less sense in the UK than in other markets. We wait with interest as to how upcoming SVOD, Paramount+, will differentiate

ITV is combining its three domestic digital services—ITV Hub, Hub+ and BritBox—into a single product, ITVX, which will have a free and paid tier and see the addition of FAST channels. It will launch in Q4

The Hub and BritBox UK have underwhelmed in their respective markets, hampered by the broadcaster favouring linear revenues and the competitiveness posed by the surfeit of free British content. ITV is looking to change this direction, with shifts in content windowing and some additional content spend

Total external revenues were up 24% YoY in 2021 (and up 4% on 2019) to £3,450 million, driven by the highest advertising revenue on record, however Studios has not yet returned to pre-COVID levels, with both revenues (£1,760 million) and margin (12%) still down on 2019 (£1,830 million and 15%, respectively)

Sky’s performance across 2021 significantly improved, driven in Q4 by a nice c.5% growth rate in UK consumer revenues and the advertising rebound, but effects of the pandemic are still being felt with EBITDA down 30% on 2019.

The decline in Group revenue accelerated in Q4 due to the severe shock to the Italian operation from its loss of most premium football coverage, although we see upsides in a possible rights reshuffle.

In 2022, Sky can leverage growth vectors including bigger content bundles, Glass, advertising innovations and broadband. Consolidating SVOD and telecoms markets may be more favourable to price increases.

It has been ten years since Netflix launched in the UK, initially riding the growing wave of internet video, but quickly raising viewer expectations of user experience, overall production quality and long-term availability of content—challenging the rest of the industry to keep up

Netflix’s push into original production transitioned streaming from pure catch-up or repositories of old favourites, to a vibrant entertainment option, driving the formation of an SVOD market and providing other content companies with a larger addressable base now familiar with paying for TV

The streamer has deftly navigated the path from insurgent to joining the same establishment that it radically inverted—through considerate industry participation and self-regulation—however further questions will inevitably be asked about the company’s growing influence upon Britain’s cultural fabric

Although Q4 net additions were on target and on par with past years, Netflix has forecast very low global subscriber growth for Q1 (2.5 million)—this would be the smallest number of additions in that quarter since the company launched a streaming-only plan over a decade ago

New US price rises will once again prove that consumers value the service and its content but, by stealth, SVOD is no longer 'cheap'

January 2022 is a decade since Netflix launched in the UK. The pace of the change in the local sector that it drives and rides is astounding, and while its efforts to embrace industry responsibility are noticeable, more will be continually asked of it