UK TV on a roll as subs soar, catch-up catches on and TV gets connected

Joseph O'Halloran | 19-07-2012

More channels broadcast and even more hours consumed, more alternatives and more use of catch-up and connected TV, but the UK TV industry is still very much dominated by the TV set in the living room Ofcom’s ninth annual Communications Market report has revealed.

Moreover the total value of the TV advertising market has not only returned to, but now exceeds (in nominal terms) levels seen before the economic downturn.

The survey by the UK’s broadcast and telecoms regulator found that in all viewers watched an average of four hours per day in 2011, up from 3.7 hours in 2004, and slightly down on the figure posted in 2010. During 2011, 515 channels were broadcast, five more than in the previous twelve months and, showing exactly how rapidly UK TV is growing, almost a hundred more than in 2005. Significantly, over this time period the share of the five main channels—BBC1, BBC2, ITV1, Channel 4 and Channel Five—in all homes number fell from 70% seven years ago to 54% by the end of last year. Digital TV take-up is now at 96%, a rise of 34 percentage points on 2005 and 3 and 5 points up on 2010 and 2009 respectively.

This increase in the number of channels available and the hours spent in form t of the box drove a 4.9% year on year increase in industry revenues increased in 2011 to reach a total of £12.3 billion. Subscriptions were up 8.3% and advertising rose by 2.1%.

Interestingly over the same period the proportion of digital TV homes paying for TV in the first quarter of years fells from 64% in 2005 to 54% in 2011. Ofcom’s research data showed that the proportion of revenue generated by public funds has more or less stayed constant over the last seven years falling slightly from 25% in 2005, to 23% at the end of 2010 and 22% at the end of last year. Yet the big trends are the rise subs and the relative decline in ad spend.

Even though over the last seven years the proportion of revenue generated by subscriptions has risen from 35% to 42%, the proportion of revenue generated by advertising has fallen from 35% to 29%. Despite a huge increase online advertising over the last seven years, there is no general exodus from TV advertising: indeed Ofcom found that TV made up 30% of total advertising spend in 2005 and 29% in 2011.

The UK also showed a growing appetite for catch-up and connected TV services. Yet despite the growth, in particular of online catch-up TV via a PC or mobile, Ofcom found that the main TV set remains the dominant device for consuming audio-visual content. In Q1 2012, 29% of UK adults claimed to consume audio-visual content online, compared to a reach of 97% of the adult population consuming it via a TV set. That said, just under a third (29%) of UK adults in Q1 2012 used catch-up TV services online. However, Ofcom believes that there is evidence to suggest that the growth of catch-up services via a PC is slowing down, with an increase of only three percentage points year on year from 27% in 2011, as catch-up services become increasingly available via internet-enabled TV sets.

Smart TVs represent a fifth, that is 2.9 million, of all TVs sold since 2010 and of these almost two-thirds (65%) said they had used the internet connection on their TV, despite the fact almost half (47%) smart-TV owners said that internet functionality was not a consideration for them when choosing a new set and also contrary to research taken at the beginning of 2012 which showed only a minority of connected TV users were connecting. Among users of smart TVs, 51% had used their set to watch catch-up TV, while activities like social networking and online shopping were undertaken by 25% and 13% respectively.