Ofcom: Streaming Subs Overtake Pay TV in the U.K.

The number of U.K. subscriptions to television streaming services has overtaken those to traditional pay TV for the first time, according to new research from Ofcom.

Ofcom’s Media Nations report finds that the total number of U.K. subscriptions to the three most popular online streaming services—Netflix, Amazon Prime and Sky’s Now TV—reached 15.4 million in the first quarter 2018, overtaking the number of pay-TV subscriptions, at 15.1 million. This is a first for the U.K. market.

Also, pay-TV revenue has declined. Following a period of sustained growth, the U.K.’s pay-TV providers saw a 2.7-percent decrease in total revenue last year, to £6.4 billion ($8.35 billion). Meanwhile, the increasing number of streaming subscriptions contributed to a 28-percent growth in online audiovisual revenues, to £2.3 billion ($3 billion) in 2017. Television advertising income fell by 7 percent, to £3.9 billion ($5.08 billion).

Spending by public broadcasters is down, the report finds. The BBC, ITV, Channel 4 and Channel 5 spent a combined £2.5 billion ($3.3 billion) on original U.K.-made programs in 2017—a record low. This is £1 billion (28 percent) less than the 2004 peak. An increase in funding from third parties toward the cost of program-making—from £147 million ($191 million) in 2008 to £338 million ($440 million) in 2017 across the BBC, Channel 4 and Channel 5—has somewhat helped to make up for this decline.

Ofcom also reports that the amount of time spent watching broadcast television on the TV set has continued to decline. In 2017, this stood at an average of 3 hours 22 minutes a day, down 9 minutes (4.2 percent) on 2016 and 38 minutes (15.7 percent) since 2012.

Total daily viewing time across all devices stands at 5 hours 1 minute, of which two-thirds (3 hours 33 minutes or 71 percent) was to broadcast content, and 1 hour 28 minutes to non-broadcast content.

Sharon White, Ofcom’s chief executive, said: “Today’s research finds that what we watch and how we watch it are changing rapidly, which has profound implications for U.K. television.

“We have seen a decline in revenues for pay TV, a fall in spending on new programs by our public service broadcasters, and the growth of global video streaming giants. These challenges cannot be underestimated.

“But U.K. broadcasters have a history of adapting to change. By making the best British programs and working together to reach people who are turning away from TV, our broadcasters can compete in the digital age.”