Screen Time

Netflix and Amazon are now the UK’s most popular form of pay-TV

The viewing habits of people in the UK are changing rapidly as subscription video-on-demand services, mainly Netflix and Amazon Prime Video, become the most popular type of pay-TV.

Last week, Ofcom released a report that shows that nearly half of homes in the country have signed up to some sort of streaming service.

The number of households using and signed up to popular TV streaming services such as Netflix, Amazon Prime Video, Now TV and Disney Life rose from 11.2 million, or 39%, in 2018 to 13.3 million (47%) in 2019. The total number of subscriptions, including multiple subscriptions in homes, grew from 15.6 million to 19.1 million. Netflix had 11.5 million customers signed up in the UK, having gained more than 25% since the beginning of 2018. Amazon Prime Video had 6 million subscribers, up 23% over 2018.

But although streaming has become incredibly popular in the UK, about 70% of TV viewing time is still on traditional channels, highlighting the importance of live programming such as sports and news. However, the amount of time that people spend in front of “the box” is in clear decline: the average viewing time of traditional TV fell by nine minutes in 2017 and 11 minutes in 2018, and is now down to three hours and 12 minutes per day.

This decline in viewership of linear TV is pushing traditional broadcasters to venture into the online video market. However, these players still hold an advantage with local content. Amazon and Netflix are investing heavily in local programming, but we don’t expect them to match the volume of that produced by traditional channels for many years. In fact, Ofcom found that local broadcasters, including the BBC, produce 100 times as much homegrown content as their US competitors.

As streaming continues to erode traditional TV viewing, ITV is taking the lead with its “best of British” online video service BritBox, which is slated to launch later in 2019. It’s working with the BBC to offer the service for £6 a month. Crucially for the legacy players, the fall in traditional viewing is most pronounced in the sought-after younger demographic of users aged between 16 and 24, whose time spent watching TV has halved between 2010 and 2018. For the first time, young people in the UK now spend more than an hour on YouTube every day.

BritBox will air shows from both channels, as well as some original programmes. The BBC and ITV have announced they will pull content from Netflix and other platforms to screen their shows on the new service. The Office is one title that Netflix will lose to BritBox, as well as period favourite Downton Abbey.

According to ITV CEO Carolyn McCall, “The agreement to launch BritBox is a milestone moment as subscription video-on-demand is increasingly popular with consumers who love being able to watch what they want, when they want to watch, and are also happy to pay for this ease of access to quality content”.

There’s no doubt that subscriber behaviour is changing in many markets. In the US, for example, a fifth of homes are expected to abandon cable-based video broadcasts by the end of 2020. With a growing number of high-quality streaming options — Disney will also soon launch its Disney+ streaming service soon — traditional TV broadcasters have to be wary of the cord-cutting trend and the switch by millennials to streaming services.