ITV and the British Broadcasting Corporation have reached an agreement on a UK streaming venture, as they seek to respond to the incursion from digital rivals including Netflix.
The BritBox service will launch in the final three months of 2019 and cost £5.99/month for high-definition programming on multiple televisions and devices, the companies said in a statement on Friday after months of discussions. That’s cheaper than Netflix’s £8.99 subscription fee for its standard service in the UK.
BritBox is part of ITV CEO Carolyn McCall’s push to diversify revenue away from traditional TV, as consumers seek to watch content whenever they want and advertisers increasingly direct more spending online. Shares of ITV, the country’s biggest free-to-air commercial broadcaster, were up 1.3% as of 9.02am in London.
“After several delays, confirmation of launch is good news,” Conor O’Shea, an analyst at Kepler Cheuvreux, wrote in a note. There is a market for local content to complement Netflix’s offering, but it’s too early to judge whether the quality of the content will win over UK consumers with multiple subscription alternatives, O’Shea wrote.
European broadcasters are increasingly coming together to pursue streaming to try to gain scale and share the cost of new platforms as they respond to US rivals Netflix and Amazon.com moving into local markets.
There’s concern among some industry observers that the efforts come too late, however. ITV and the BBC were part of a group of British broadcasters that had tried to pool their content online in 2007, but were blocked by regulators fearing they would prevent new entrants.
BritBox will include previously shown episodes of ITV and BBC series, such as Love Island and Gentleman Jack. The companies also plan to commission new original series and pull in some shows currently licensed out to other subscription video-on-demand services once those agreements expire.
ITV will own 90% of the equity in the new venture, while the BBC will own the remaining 10% and have an option to acquire additional shares up to 25% over time.
UK communications regulator Ofcom has given a provisional green light to the BBC’s involvement in BritBox and said it’s unlikely to gain an unfair competitive advantage from the streaming service. The publicly funded corporation has strict rules over its commercial activities.
The BBC and ITV launched a similar service called Britbox in North America in 2017. It now has 650 000 subscribers, and McCall said on Friday that it was “proving to be very successful, exceeding its targets”. — Reported by Greg Ritchie, (c) 2019 Bloomberg LP