With Netflix missing subscriber count estimates in the most recent earnings report published by the company, and Walmart announcing a attempt to join in the streaming service industry, the market is developing contrary to expectations. The overall shift afoot is due to the change of way TV content is consumed, causing revenues generated from pay-TV in Britain to fall for the first time after years of sustained growth.
According to BARB Establishment Survey data, the big companies in Britain – Netflix, Amazon and NOW TV- totaled a subscription count of 15.4 million subscribers in the first quarter, more than the 15.1 million pay-TV contracts the old industry holds. The numbers look rosy for new entrants, but investors should keep in mind that traditional pay-TV still generated significantly higher revenues than video-on-demand subscriptions. Pay-TV subscription revenue totaled over 6.4 billion pounds in 2017, which was down 2.7% from last year, but heavily beats the 895 million pounds generated by video streaming services.
In terms of user data, time spent watching broadcast television on a TV set decreased. Currently, the average figure is 3 hours 22 minutes a day, nine minutes lower than 2016’s and 38 minutes since 2012. Meanwhile, mobile devices are becoming increasingly popular among 16-34-year-olds. Less than 50% of this demographic (whose average watching time is 4 hours and 48 minutes) utilized broadcast content.
Keith Knutsson of Integrale Advisors commented, “The transition in viewing habits has broadcasting industry titans shifting strategies. Whether the broadcasting industry’s fate will assimilate those of railroads is to be seen, but with appetite in acquisitions the current leaders in streaming might see competition ramp up.”