RE: TV+27 Mar 2019 23:27
What it means for ITV (and other Broadcasters)
There were several different layers in the Apple announcement and that means the implications for ITV and other TV Broadcasters are less clear cut than may first appear. However, we would highlight the following key points.
1. Apple TV+ is a separate, subscription, ad-free service separate from the Apple TV app currently available, so it is another SVOD streaming service entering into an already crowded market. It is advertising-free so this is not a play for TV advertising revenues directly. However, like with Netflix and Amazon Prime, the concern will be that TV+ will compete for (1) eyeballs, which potentially reduces ITV’s / broadcasters’ audiences and (2) consumers’ money, which could impact takeup of Britbox in the UK and other broadcasters’ SVOD services.
2. TV+, for the moment, will only show original content, not licensed library content that Netflix or Amazon Prime provides currently. That should be good news for a content producer like ITV, which has significant presence in what are the three most important markets globally for content (the US, the UK and the Netherlands) and offers the chance of extra revenues. Other broadcasters may also see a positive impact although, bar RTL (NR) and, less so, ProSieben, they have little international content capabilities. However, at the moment, ITV or other broadcasters won't benefit from selling their back catalogue of content to TV+. However, we would expect over time this to change as we think Apple will come under pressure to match the content of other SVOD providers;
3. One thing to look out for is the potential knock-on effect of Apple’s demands for original content in terms of the rights content producers hold onto when they sign a deal with streaming services. Currently, the likes of Netflix are notorious for demanding worldwide rights as a quid pro quo for providing significant funding to produce programmes. In a market such as the UK, where the value to content producers has often been international revenues, that has created some tension. If Apple decides to be more generous in its terms (and its rationale here for doing so is that it may see the TV+ product as a way to push its hardware revenues), then that would also be beneficial for a content producer such as ITV.
4. Separately, Apple looks as though it will push more aggressively its current Apple TV app, which will provide access to a wide range of streaming services, including ITV’s SVOD JV in the US, in which ITV owns 45% and which was specifically mentioned as one of the main channels on the more general Apple TV service. That should boost take up of the service, which already appears to be running ahead of schedule (ITV reported the associate had not made losses in 2018 whereas most analysts would have expecting losses into 2020/1) and it should also provide a useful platform for ITV’s planned UK SVOD service, also called Britbox.
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