VIEWERS are flocking to ITV’s free streaming service for exclusive shows such as Nolly and The Twelve, helping to offset a plunge in traditional advertising revenues.
The broadcaster still best known for Coronation Street revealed that advertising slumped 10% in the first quarter of the year though it thinks the Rugby World Cup and Love Island will boost returns later in the year.
Ad revenue could still be down another 12% in the next quarter however, a sign of a macro economic squeeze that is hitting all groups reliant on ads for revenue.
The broadcaster saw overall revenue down 7% to £776 million in the three months to March, largely in line with City expectations.
But ITVX is booming, with a 49% increase in steaming hours and a 29% rise in digital revenue.
Some media watchers say ITVX, since it is free to view, will benefit as pinched consumers trade down, perhaps scrapping expensive rival services such as Netflix.
Last night Disney revealed that its flagship streaming service lost 4 million subscribers this year so far. There is some scepticism that the streaming model will prove truly profitable for media giants such as Disney and Netflix.
Disney’s streaming business made a loss of $659 million, better than the £1.1 billion lost in the previous quarter.
Chief executive Carolyn McCall said: “Total advertising revenue in Q1 was down 10% - as expected and better than the wider TV advertising market. We are looking forward to Q3 with Love Island and the Rugby World Cup set to draw large broadcast and streaming audiences.”
John Choong at InvestingReviews.co.uk said: "Despite the decline in overall revenue, there was still plenty to celebrate about ITV’s Q1 results, most specifically the long-term potential surrounding ITVX. The free, ad-funded streaming service performed extremely well as it saw digital revenues rise by strong double digits, backed by a steep rise in streaming hours. This goes to show that the content it’s offering is resonating well with viewers, and as long as this continues, ITV will be well-positioned to capitalise on a rebounding advertising market in the medium term.”
Joshua Warner, Markets Analyst at City Index, said: “ITV’s figures were softer than anticipated in the first quarter. That was primarily down to revenue from ITV Studios coming in far below estimates as more content is pushed out to later this year. The company promised to keep growing ITV Studios at a faster pace than the wider market and improve its profitability over the coming years. Advertising revenue declined 10%, which was less than expected but ITV warned this could fall around 12% in the current quarter to suggest conditions remain challenging.”
ITV aims to generate £750 million of digital revenue by 2026.
