Published: January 2013
Price: £795 (Extended licence: £1590)
About this report
The UK TV production industry has continued to grow through an uncertain economic period. The pace of change both in technology and business models looks likely to increase in the future in what is a significant export-earning industry for the UK.
In this report we review the trends which are impacting the television production industry, at the global level in what is increasingly an international industry, as well as specifically in the UK.
We quantify the UK market size, historical growth rates, segmentation patterns and levels of industry profitability while setting out the factors which drive these figures. This includes an in-depth analysis of the relevant macroeconomic context and television industry revenue as well as spending patterns – setting out historical trends and forecasts.
Our forecast for industry growth by segment is based on this analysis of historical trends and our understanding of growth drivers and how they impact the key customers and segments.
Who is it intended for?
TV Production companies
Broadcasters and television networks
Governments and regulatory bodies
TV Production market growth and drivers
The total value of UK television commissions is now over £3bn in value, having experienced modest but sustained growth during the turbulent economic climate of recent years
Although they still account for over 75% of the TV Production market, growth in demand has not been driven by the traditional PSB channels but the multi-channel segment, led by BSkyB, which has, in recent years, started to commission more original UK programming than in the past
Key industry issues
The most important driver of value in the TV production market is the one which is hardest to predict: hit rate in developing the highly successful formats, such as ‘Big Brother’, ‘Who Wants To Be A Millionaire‘, ‘The X-Factor’ or ‘Downton Abbey’, which become major successes and generate large profits over a period of years. Shows of this nature can help production companies to deal with the relatively low revenue visibility which they have in what is a project-based business
Formats have a lifecycle and eventually they become stale and have to be replaced. Given that it is generally more profitable and less risky to extend the life of an existing format than to come up with a new one, careful management of formats to prolong their life, is also important. This requires working with the broadcaster to ensure that the show is deployed in the right time slot for its target audience and not over-exposed.
Television is increasingly becoming an international industry. The UK TV production industry is a global leader and enjoys significant and growing export sales. It is aided in achieving this by the consolidation of the industry internationally which has led to many of the leading producers being part of international groups which are well placed to market their capabilities and content worldwide.
The largest players in the UK TV production market remain the two major in-house production arms of the leading networks, BBC and ITV.
The TV Production market has traditionally been fragmented. Barriers to entry were historically relatively low allowing a large number of small and medium-sized players to thrive.
However, acquisition activity in recent years has led to significant consolidation. Several large groups, which now have extensive international operations and are sometimes known as ‘superindies’, have emerged.
The TV production industry is at an exciting point and continues to develop, leaving significant areas of uncertainty
The traditional broadcasters remain the major commissioners of content but they are facing revenue challenges, whether from the internet competing for their ad revenues, or the licence fee being frozen. However, increased production demand on the part of the multi-channel segment, led by BSkyB, appears to be a realistic prospect
New funding models such as deficit funding, are changing the economics of the industry as it becomes increasingly international and multi-platform
New initiatives are being launched, such as IPTV, which could drive demand for production activity – both incremental production and, more importantly, by supporting the economics of ongoing production – if they are successful.
UK TV production market – 5
TV Production market definition
TV Production market characteristics and trends
TV production market size and growth – 12
TV production market size and growth
In-house vs outsourced production
Independent production company revenue segmentation
Volume and price
TV production market drivers – 17
Discussion of TV production market drivers
Television Industry revenue
Competition to TV advertising from other media
Trend growth of subscription TV
BBC licence fee
Competitive landscape – 25
Summary of leading operators
Forecasts – 29
TV production market forecast
Key forecast assumptions
Appendix – 32
List of figures (UK Television Production Market Report)
1. Public service broadcasters / hours broadcast by genre
2. UK TV industry: programme spending by customer / £m
3. Commercial multi-channel content spending by genre / £m
4. UK spending on television commissioning by type of channel / £m
5. UK spending on television commissioning split between in-house
vs independents / £m
6. Independent production company revenue segmented by
source / £m
7. Average programme cost per hour broadcast (main five PSB
channels) / £’000
8. International comparisons of TV industry revenue per head / £
9. Average daily hours of viewing (total TV)
10. Audience share by channel / %
11. UK TV industry revenue by type / £bn, % year on year change
12. Share of UK advertising spend by selected media / %
13. Change in number of new Sky TV subscribers / m
14. BBC licence fee (colour TV) / £ per year
15. Average daily viewing by month during 2011 / hours and minutes
per person per day
16. UK TV production market estimated revenue shares / £m
17. UK spending on television commissioning by type of channel / £m
18. Forecast share of UK advertising spend by selected media / %