The future of free-to-air television (FTA) in the UK was the subject of MTM’s latest Forum event in London last week. Free-to-air television has been the cornerstone of British viewing and the Public Service Broadcasters’ (PSBs) – FTA channels still account for the significant majority of UK TV viewing across multiple genres. The expansion of Digital Terrestrial Television (DTT) broadened the scope of FTA television, with the launch of Freeview in 2002.

However, the market is currently undergoing significant changes. New online streaming services, led by Netflix and Amazon, have huge budgets and marketing clout, while pay-TV providers are offering cheaper ‘skinny bundles’. Competing for eyeballs has never been more difficult.

What does this mean for the future of FTA TV? Are the PSBs equipped to deal with these changes? Are FTA revenue streams under threat?

Our five wonderful panellists helped us understand these developments, and find out what the future of FTA television in the UK holds:

Jonathan Thompson, CEO, Digital UK; Sarah Simon, Senior Analyst, Media, Berenberg Bank; Kim Chua, Head of Strategy, Channel 4; Rebecca Marvell, Head of Television Strategy, BBC; Simon Brown, Executive Director – Strategy, Research, Regulatory Affairs, UKTV

Why is FTA TV worth preserving?

All panellists agreed PSBs provide a valuable public service. Their ability to producing a wide range of content in the public interest was cherished by everyone in the room. However, the conversation turned to whether PSBs could compete with deep-pocketed international subscription video-on-demand (SVOD) players. PSBs spent £2.5bn on original UK content last year, compared to the ~$13bn spent by Netflix, and some panellists argued PSBs

should produce content in the areas SVOD giants do not; and stay away from large big-budget dramas. However, others retorted that successes in recent months, for example the BBC’s Killing Eve and The Bodyguard, have shown high return on investment and that it is dangerous to operate in the fringes of public viewing.

“Public Service Broadcasters cannot only work in market failure genres, that is how they get pushed out.”

One audience member asked whether it would be worth turning off FTA-TV tomorrow. This notion was collectively rebuffed; with individuals on the panel stating that 10% of the country currently possess no broadband, and as such, lack the ability to be able entirely switch across to VOD-services or DTT.

What are the key challenges facing FTA TV?
The panel noted competition is intensifying with the launch of Disney+, BritBox, and Warner Media’s service (provided it comes to our shores following its planned soft launch in America). Despite these developments, the panel noted audiences would be reluctant to pay for an inordinate amount of subscriptions. One panellist explicitly stated that more than half of UK viewers are unwilling to pay for TV beyond their licence, bolstering the case for FTA TV.
The debate moved on when asked about whether FTA broadcasters are too anxious about appealing to 16-24-year olds. One panellist noted older demographics have far more disposable income yet are currently neglected by FTA broadcasters. Another stated that 16-24s are not loyal customers. The latest ScreenThink data from MTM shows this: among 16-24s, only 22% stated they couldn’t live without ITV and 9% for Channel 4; whereas 50% and 44% stated they couldn’t live without Netflix and YouTube respectively. It was noted that this is a structural trend, advertisers look to appeal to younger audiences to gain their lifelong loyalty. But one panellist suggested it is time FTA advertisers addressed their ageing audience.

“We are an ageing population, more people are watching TV, why are advertisers targeting 16-24 year olds? Why is advertising geared towards this demographic that returns little?”

How can FTA broadcasters respond?

The panel agreed FTA TV in the UK is under threat, but robust enough to evolve. One panellist noted audience measurement needs to develop; the speed and granularity of online measurement place Google and Facebook in a strong position to capture digital advertising spend. As one panellist noted, TV advertising is 60% less expensive than it was 20 years ago, squeezing commercial FTA broadcasters.
One panellist celebrated the success of ITV, attributing this to the breadth of content it produces, including game shows, soaps, new, sports, and drama. They have also diversified their business through selling TV rights and formats to other territories, culminating with the launch of ITV Studios Netherlands late last year. In addition, another panellist suggested that the future of FTA will be collaboration, as we have seen with the launch of BritBox, combining assets to provide a counter to large, American tech giants. However, another expectation from many in the room was that the number of channels that may be available as party of a FTA offer – currently about 70 – may not be sustainable.

“There may be a degree of consolidation of providers, whether we will see a reduction of channels? I’m not sure, maybe not.”

Overall, participants felt that despite some challenges ahead, the FTA sector in the UK has sufficient traction with audiences and advertisers to succeed in the coming years. But it looks like being an interesting journey.