ITV is to launch a new streaming service combining ad-funded and subscription TV shows and films as it aims to become a “national champion” in the battle for British viewers with US streaming giants including Netflix, Amazon and Disney+.
ITV, which has told the Russian broadcaster of the local version of I’m A Celebrity… Get Me Out of Here not to broadcast the show this year as part of a programming licensing and sales freeze with the state, said that the new ITVX service will launch in the fourth quarter this year.
ITVX will become its new streaming master brand, with the existing free ITV Hub and paid-for, ad-free ITV Hub+ brands to be scrapped while it will also draw on content from BritBox, its international paid streaming joint venture with the BBC.
ITV says that the new service, which will be led by free advertising-funded content with an optional subscription tier, will offer viewers a “starry” premiere each week and 15,000 hours of content when it launches in the fourth quarter this year.
“We are confident that we will become a UK leader in streaming,” said Carolyn McCall, chief executive at ITV. “Our ambitions in the streaming world are not world domination. It is about being a national champion. It is compelling and our expectations of subscriber numbers have been modelled in a very realistic way.”
ITV said that it currently has 1.2m subscribers to ITV Hub+ and Britbox UK, which the BBC is pulling out of as part of the launch of ITVX, while ITV Hub increased registered user accounts by 6% to 34.7m.
Netflix has an estimated 14 million paying subscribers in the UK, with rival Amazon’s Prime Video at 12 million and Disney at almost 5 million.
ITV said the launch of the new service forms part of a target of doubling streaming viewing, which rose 31% to 630m hours last year and total digital revenues to £750m by 2026.
The broadcaster’s share price tumbled more than 14% after the announcement on Thursday morning, making it the second-biggest faller on the FTSE after Russian mining firm Polymetal, as investors balked at yet another costly investment and rebrand to try and develop a viable streaming service to support its traditional linear TV operations.
ITV said that it would invest £80m in developing ITVX over the next two years, with a further £180m spent specifically on exclusive digital-first content to lure viewers and subscribers to the service.
As a result, ITV’s overall content budget will increase from a forecast of £1.16bn to £1.23bn this year and rise to £1.35bn next year, an increased level that ITV said would become its new normal annual spend.
The scale of the challenge facing ITV’s traditional business in the fierce battle for viewers was shown in its annual viewing figures, which showed a 9% fall in hours watched across its TV and streaming services combined to 15.1bn. Viewing of its flagship linear channels dropped 11%, with a 27% increase in ITV Hub hours watched unable to make up for the decline.
ITV said it would pay for its increased investment programme with a new cost-savings plan, which includes a “reduction in main channel commissions”. By 2026, in total ITV expects to make £50m in annual savings from a “continued reductions in broadcast supply chain costs, overheads, property rationalisation and further innovation in ITV Studios”.
Overall, ITV enjoyed a strong 2021, with pre-tax profits up 48% to £480m thanks to record annual advertising income as businesses looked to return to growth as pandemic restrictions eased.
Total revenues rose 24% to £3.4bn fuelled by total ad revenues rising a quarter to £1.95bn.