Peak TV has been reached and UK public service broadcast is shrinking

The writing is on the wall for many of the UK’s hundreds of independent TV companies and even one or more of the core public service broadcast (PSB) channels that have been the driver of the UK’s creative media industry for decades, according to senior TV executives.

Hearing from panellists at the Edinburgh TV Festival session ominously titled ‘Back from the Brink: Reimagining The Future of Television’ it seems the only way to survive is to admit that the decline in viewing to traditional TV is irreversible and that contraction is inevitable.

Patrick Holland, CEO, Banijay said: “Just in terms of the sheer economics there too many production companies for the amount of hours that are commissioned each year, too many.”

Dan McGolpin, Director, iPlayer and Channels agreed: “There are too many production companies and it going to be really challenging. You can’t sugarcoat that. People are going to have to move into other areas. There isn’t perhaps the amount of demand, the money or hours to keep everybody alive.”

Currently in the UK TV industry, an estimated 51% of those in TV drama are out of work. In unscripted, 57%. In commercials, 53%.

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Their situation raises a profoundly difficult question. How big can this industry be?

Fatima Salaria, Executive Chair of The Edinburgh TV Festival said: “While BBC, Channel 4, and Channel 5 do a completely different job, I think combining them all together on some kind of super iPlayer-type content platform would be an idea because I think that would ensure the survival of Public Service values.

While Freely, the newly launched streaming service, is an attempt by the four UK PSBs to do just that, Salaria voiced concern that shows with a PSB remit, particularly documentaries and current affairs reflecting issues impacting the audience, will be lost.

“There will be indies that will not be able to compete in the [streaming and social media] world because of the way their business is structured and I fear that you’re going to end up with an elite class of people who are going to be making elite type premium factual programs, and dramas who are going to be the winners and that shows about harder issues will get lost.”

Jordan Schwarzenberger, Co-Founder of Arcade Media and manager of The Sidemen works with digital creators to scale their portfolios and launch new businesses. He said he believed “attitudes among Gen Z and Gen A are drastically shifting away from PSBs and in reality, I can’t see the license fees sustaining at the same level unless there’s a greater shift towards how and where that audience are consuming, which is short form, which is on YouTube, which is on social.”

He urged indies and broadcasters to “be brave and honest about the [decline in viewing] numbers because they are real. And it’s not going to come back.”

PSB landscape

Earlier, Ros Atkins, Analysis Editor for the BBC News, had given a typically astute summation of the state of UK TV. He explained how UK broadcast had gone from the heady heights of peak TV in the early 2020s - a time when producer revenues reached £6.8bn and the local industry employed over 90,000 people, to now where the freelance market is in a parlous state and serious questions are being asked about the future of PSB.

“I’ve tried to understand this moment for UK television and keep coming back to four major shifts, all of them interconnecting, all of them taking TV somewhere new,” he said.

The first is the shift in TV and video consumption. What people watch - and where they watch - are fundamentally changing.

Last year, broadcast TV channels accounted for 62% of long-form programmes. That’s projected to be 28% by 2035. The BBC’s Director-General Tim Davie acknowledges: “A switch-off of broadcast will and should happen over time.” And already two types of platform are taking its place. VOD streaming services and video-sharing platforms - like YouTube and TikTok. Together, they make up at least 30% of viewing minutes across all devices in the UK. That is certain to go up.

“The broader point is that the internet hasn’t just transformed the distribution of TV and video - it’s transformed what we watch and who is making it,” Atkins said.

The shift in consumption connects directly to a second shift identified by Atkins: the globalisation of TV.

As streaming and video sharing take more of the market - more content and distribution is controlled by a small number of international businesses. Amazon, Netflix, Disney, Apple, and Google – all based in America. And Tiktok, which has a Chinese parent company.

In 2022 - 86% of all investment into film and high-end TV production came from overseas - primarily from the US. Netflix says it invested close to $6bn in the UK between 2020 and 2023.

“But some see the risks of globalisation too. Of marginalisation of British stories. Of British ideas becoming someone else’s IP. Of British media losing market share.”

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Ad Tech

To understand the consequences of this - and of the shift in consumption - Atkins factored in a third shift… that of advertising’s digital transformation.

With advertising, there are long-term trends that pose challenges for broadcasters, he said. The amount of money spent by advertisers in the UK in 2023 was over £36bn. But of that total, online advertising is over three-quarters of it, the highest percentage it’s ever been. TV advertising is 13% - down nearly 9 percentage points in 12 months.

Kate Scott-Dawkins, the Global Head of Business Intelligence at advertising giant Group M, recently said: “TV companies may need to accept that their ad revenues from streaming, while being significant, won’t match what linear once offered, at least in the near term.”

That era may be over.

“Across the media, the biggest beasts of the tech world - with their sophisticated ad technology - are taking the bulk of the ad market,” said Atkins. “That’s the context as business models in the TV industry are reshaped.

“In advertising’s move to digital - in TV’s globalisation - in the shift in consumption - we see a fourth major shift - the centrality of technology,” he said.

Of course, technology has always mattered, but now it’s a dominant factor across the industry, from streaming platforms to production to ads - and that requires investment.

This year, the BBC is spending £71m on online and TV development. But Netflix has spent $1.4bn on technology in the first half of this year alone.

“UK streamers can point to rising user numbers, rising viewing hours, to new and improved products, but a truth remains. The need for ever more complex technology is increasing exponentially - not least because of AI. And the biggest global companies - with their vast resources - inevitably have an advantage.”

Shifts of this scale would be a lot for any industry to navigate. They ask fundamental questions about how the UK TV industry works - and what it wants to be. And right in the middle of those calculations is PSB.

ITV has invested millions in ITVX. Channel 4 is accelerating its shift to streaming. The BBC’s Tim Davie has asserted: “We can choose not to rely solely on US and Chinese tech companies that may not have the interests of a shared British culture.”

Yet streaming dominated by international streamers seems an unstoppable force. Viewing hours on streaming for this year in the UK show that Netflix is over twice as big (34%) as anyone else. BBC is next (14%), then Disney+ and Amazon Prime.

“Let’s stop to think what this shows,” said Atkins. “In the streaming market - where we know viewers are heading - where big tech is competing for ad revenue - where expensive tech development is crucial - the PSBs are there, they’re growing - but the majority of viewing isn’t with them - it’s with the global players. If that continues, there are a range of commercial and cultural consequences that may follow.”

The Labour government may choose to provide more protective ringfencing around PSBs – for example by enshrining their right to a high-profile position on the EPG, but they could be fighting a losing battle.

In the meantime, many talented people remain out of work and the longer they remain so poses an existential threat to UK TV and even the UK’s creative industries of which TV is such a bedrock.

To Atkins, the golden age of TV is over. The industry must acknowledge it is now in a different era. “One in which what we watch and where we watch has changed,” he said. “Where new revenue streams are required, and where technology is dominant. Where public service media will have to restate its case, and regulators consider their options. Where the routes to the consumer and the routes to success are changing.

“What to do next is keenly debated. But we can perhaps agree on one thing. The digital revolution in TV and video isn’t coming. For better or worse, it’s here. There’s no going back.”

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