BritBox venture will help BBC, ITV survive, not oust Netflix

News out this week that the BBC and its long standing rival ITV, the first UK free to air advertising driven network, will join together to launch something called BritBox as a streaming service. Pundits everywhere have automatically talked about it as Netflix rival, but that’s really not what this is all about.

Rethink TV, our forecasting arm, has already noted in its refcent report on the massive rise in SVoD services globally entitled (The rise in SVoD viewing to swamp traditional TV by 2023) that most advanced countries, especially some in Europe, have put several free to air networks together to provide strong content for an SVoD. This is not about pushing back at Netflix, more it is a case of providing content in the format which people demand, in order to remain relevant. What was once a TV channel, or multiple TV channels, needs to become an SVoD, so that customers around the world can elect to subscribe, rather than paying for a pay TV service which automatically charges clients for lots and lots of bundled TV channels. It is essentially a part of a global unbundling process.

In Germany and France RTL, the Bertelsmann owned TV conglomerate, has made a similar move with 6Play and Now Plus, and is homogenizing the offerings and wanting to push them throughout Europe. Canal + is on a similar path, trying to relaunch its now shuttered CanalPlay service, and US majors are beginning to coalesce around similar SVoDs. There are European SVoD services from Discovery, CBS, HBO (Warner Media) as well.

Also in France the Salto consortium is planning to build an SVoD around content from France Télévisions, TF1 and M6, so that also includes RTL who owns M6.

There are discussions whereby ProSiebenSat and Discovery will host a merged SVoD in Germany, and last Summer it invited rival channels to join in. This and other SVoD offerings may also take in online addressable advertising options as well as chasing sufficient of content to survive in the world that Netflix has created. US majors have also attacked regions like Asia Pacific and Latin America in the same way, with CBS for instance creating its own SVoD for Latin America around all of its channels.

The BBC and ITV have confirmed they are in the concluding phase of talks but they have had talks many times before. What make this different is that regulators will allow this type of deal, whereas in the past the UK Competition and Markets Authority and the German Bundeskartellamt were both horrified at the prospect of two TV services merging their efforts behind one service, and now they are realizing that SVoD uptake is growing so alarmingly that soon they may have no indigenous TV industry left.

Interestingly they plan to call this service BritBoz, but there has been a BritBox SVoD in operation for some time, made up of BBC content and run in the US in conjunction with AMC networks, which we estimate to have over half a million viewers in the US, rising by around 200,000 a year. AMC works distributes the BBC World New Service too.

The interesting issue is whether or not the BBC will be allowed under its charter to operate in an SVoD which takes advertising and this could be a great opportunity to dump advertising for ITV and gets its finances on a content only subscription footing. However it is likely that only the ITV programs will have advertising and that SVoD only will be allowed only outside the UK.

The BBC and ITV say they have agreed a joint vision for the service, and are now working on a formal legal agreement. But this will likely be like the “club” of existing YouView members, all up against newcomers like Netflix. But if it tries to become old broadcasters Vs SVoD players, this will re-invigorate the competition issues, and the regulator will likely block the move.

The other issue is just how much US content which both the BBC and ITV only license for the UK, will be allowed in any overseas version of BritBox. Chances are the content of US and worldwide partner AMC may be all that it can rely on here, although European legal changes suggest that if this service is for UK people overseas, that it will be allowed to carry any content licensed for the UK market. Brexit may complicate this also.

The aim is to provide pretty much what BritBox does in the US – original streaming service to ex-pat Brits of British made boxsets and original series, which would likely include a lot of old library content, going back decades, which is currently not available even on their existing online services today.

BBC Director-General, Tony Hall, said: “I am delighted that the BBC and ITV are working together on something truly special – BritBox. A new streaming service delivering the best home-grown content to the public who love it best. The service will have everything from old favorites to recent shows and brand new commissions. It’s an exciting time for the viewing public.”

Right now, all the way across Europe, Asia and Latin America, local country broadcasters are finding their content marginalized by Netflix and Amazon, who simply outbid broadcasters for top content, as they can monetize it globally and not solely in one country. When Disney joins them in this over the coming 3 or 4 years, it will likely be thin gruel for broadcasters, who will only get the programming that Netflix et al do not want to commission. Unless they spread their wings and sell internationally not as TV channels but as SVoDs.

Audience measurement firm BARB says that the UK has at least one SVoD in each of 12 million households. Our own research says that there will be close to 17 million paid for SVoD subscriptions in the UK by the end of 2019, although many homes subscribe to 2 or more services.