TV had its fair share of bad press in 2023. Particular lowlights included a rather tepid Ofcom Media Nations report, a since revoked article from Grace Kite on Marketing Week about the rising cost of TV and finally the year ending with the Guardian reporting a doom and gloom story about the slump in Christmas TV Advertising. This isn’t TV’s first round of bad press nor will it be the last. TV has traversed a veritable onslaught of impending predictions of death and decline yet it remains steadfast in the corner of 95% of British living rooms. Granted, the way we have watched has changed, but it has since the dawn of Television.
However, there are plenty of reasons to be cheerful about TV in 2024 and beyond. To butcher a quote from Mark Twain, reports of TV’s death are an exaggeration. There is decline, for sure, but I think it’s worth unpacking some of the numbers as some of the bad press often lacks a little colour and context. TV continues to power and drive change. Just 10 days after ITV aired “Mr Bates vs. The Post Office,” Rishi Sunak exonerated 736 wrongfully convicted postmasters. The TV drama, exposing a major injustice, prompted swift action, achieving in a week what postmasters had campaigned for over 25 years.
Is it as bad as made out?
Firstly, looking at TV revenues, it’s no secret these have been declining and with good reason, we’ve seen increased fragmentation in the market as viewers are spoilt for choice. However, the decline isn’t as bad as much of the media makes out. TV revenues in 2023 are only down 4% versus 2015, which is up on the expected trend if we extrapolate what was predicted to happen before the marketing world was turned on its head with a global pandemic.
As can be seen in the chart above, TV Revenues saw huge a decline from the norm in 2020 before rebounding sharply in 2021. This was all Pandemic-induced behaviour, with many brands cutting spend given the commonly held misconception that advertising throughout this period was wasted money. Instead, we saw consumer spend artificially dammed up as quarantine procedures and furlough prevented people going out and spending money. Savvy advertisers realised this dam was ready to burst and capitalised when it did. The relative clutter-free advertising environment gifted a unique opportunity to drive disproportionate share of voice which in turn grew market share. Brands such as Peloton, Cinch and Cazoo doubled down on TV investment and reaped the rewards, so much so that the rest of the market sat up and took notice. This resulted in the revenue boom of 2021 as advertisers felt the negative of a lack of brand investment. Here at Medialab, we actually saw a 250%+ increase in equivalent impacts when comparing the pre and post pandemic period.
The 2023 revenue figures exceed those of 2015 by almost 8% and are way above the expected trend had the pandemic not happened. This was TV’s renaissance period, but also the yardstick that it is compared to today. Not only were revenues soaring, but lockdown procedures also resulted in impact increases, and this higher artificial base, borne of out mandated lockdown scenarios, bucked the previous historical trend.
2024 looks to be another interesting year. As outlined in Medialab’s most recent Navigating the Big Squeeze, alongside YouGov, the cost-of-living crisis looks set to continue. However, inflation coming into the year has been at its lowest since September 2021. There is mounting pressure on the Bank of England to reduce interest rates quickly, which if they did, would help bring down the cost of borrowing and could result in more advertising spend. Current predictions have the market down 7%, however if we refer to the graph above again, revenues would have to decline by 10% to return to pre-pandemic trend. So despite these factors, TV is still out-performing on revenue relative to the pre-pandemic prediction. It would also be remis not mention that we also have a strong sporting year with the Euros in June and July followed by the Olympics, which whilst not available to buy commercial, does have a halo effect as commercial partners increase spend around the competition. There is also the looming election and whilst PURDAH temporarily halts government spend, I don’t think it is too cynical to say that Rishi will likely increase spend whilst he still has the ability to in a bid to potentially get voters back on side.
Have we reached SVOD saturation?
With little else to do, lockdown increased all of our TV viewing, including to subscription services and likely accelerated this adoption. This SVOD behaviour continued post lockdown as new content and services were released and discovered. Our traditional TV consumption returned to pre pandemic behaviour, but with more choice and production schedules halted by lockdown restrictions viewing experienced sharper declines.
This decline continued throughout 2021 and 2022, however we now seem to have arrived at total SVOD saturation point with subscriptions stalling for the last 6 quarters according to the Barb establishment survey. Whilst some of the newer players such as Disney+, Apple TV and Paramount+ have seen quarter on quarter growth, the cost-of-living crisis has bitten hard and consumers are struggling to justify multiple subscription services. Clamp downs on password sharing has also not helped and despite the likes of Netflix offering a cheaper, commercially supported product, uptake has been slow. Though it has been a tumultuous few years for traditional TV, now the ceiling of subscription services seems to have been hit, linear viewing is beginning to level off. 2023 is roughly on par with 2022 for most audiences, so the 2.6% decline in viewing figures pales in comparison to the declines we saw in the previous two years.
2024 promises a challenging year for SVOD services, which should hopefully be to the benefit of linear viewing. With so much content on Disney+, Netflix and Amazon coming from the United States, the Hollywood writers and actors strike will severely hamper the content offering on these services. Instead, they will have to rely on legacy, dubbed foreign-language and domestic content and whilst this will attract a certain audience, it’s a dramatic shift in content strategy and could result in consumers voting with their feet and moving away from these platforms.
Audiences may also get frustrated by constant price hikes and ad-supported products, as from February Amazon’s Prime Video will be showing ads to all users that haven’t opted out by paying an additional £2.99 a month. This is on top of Netflix and Disney’s existing commercial offering, albeit they operate an opt-in rather than opt-out model, though I wouldn’t be surprised to see this stance change if subscriber numbers continue to dwindle.
This presents a huge opportunity for linear TV to attract audiences back. 2023 saw huge growth in the broadcaster’s BVOD platforms with ITVX up a whopping 60%+ for certain audiences. Broadcasters need to continue that success and try and spread that out to live viewing too. This will hopefully be aided by new technological innovation, such as Freely. Set to launch in 2024, Freely offers a live linear TV experience via IP, allowing viewers access to live TV in locations that may not have had ready access to an aerial or satellite. For younger, digital natives, this may be a better way to connect to linear content and thus increase impacts or at least serve to mitigate the decline YoY.
Conclusion
In the face of a turbulent media landscape and a barrage of negative predictions, TV has proven its resilience in 2023 and this is expected to continue into 2024. Despite the decline in revenues, closer examination reveals a nuanced story.
The shifts in viewer behaviour, accelerated by lockdowns, led to a surge in SVOD services. However, this growth has reached saturation point, with subscriptions stalling in the past six quarters. 2024 holds promise for linear TV, as SVOD platforms face challenges such as the Hollywood strikes, audience frustration with price hikes, and the introduction of ads on platforms like Amazon Prime Video.
As the industry navigates these challenges, technological innovations like Freely, set to launch in 2024, offer a ray of hope. This platform provides a live linear TV experience via IP, catering to audiences without ready access to traditional broadcast methods, thus mitigating linear decline and reconnecting with younger, digital- native audiences.
The story of TV in 2024 is going to be one of adaptation, innovation, and the continued quest for relevance in a rapidly evolving media landscape.
