About this report
This market includes the production of programmes for UK television networks television as well as associated, or spin-off, revenues from sources such as overseas programme sales, format licensing and exploitation of digital rights.
It excludes other types of production such as films and corporate productions as well as commissions from overseas broadcasters.
The report reviews 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.
It also quantifies the UK market size, historical growth rates, segmentation patterns and sets out the trends which have driven these figures. This includes an in-depth analysis of television industry revenue and the factors behind it as well as spending patterns.
Our forecast for industry growth by segment is based on this analysis of historical trends and our understanding of how growth drivers impact the key customers and segments.
Why is it useful?
The UK television production industry has continued to grow in recent years despite the economic downturn.
It is now a significant export-earning industry for the UK.
The pace of change both in technology and business models looks likely to increase in the future with the BBC Charter renewal creating further uncertainty, and potential opportunity.
Despite recent market consolidation, the industry is relatively fragmented with potential for further mergers to occur.
Who is it intended for?
TV Production companies
Broadcasters and television networks
Investors in these businesses
Market regulators and policymakers
Banks, analysts, consultants and other parties with interests in the sector
Market growth and drivers
The total value of UK television commissions is now over £3.3bn in value, having experienced modest but sustained growth during the turbulent economic climate of recent years.
Although they still account for most of the market, growth in demand for TV production 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 TV production 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 overexposed.
Television is increasingly becoming an international industry. The UK 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 television production market remain the two major in-house production arms of the leading networks, BBC and ITV.
The market has traditionally been fragmented. Barriers to entry were historically relatively low allowing a large number of small and mediumsized 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 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 until the next BBC Charter renewal in 2016.
However, there is increased production demand from the multi-channel segment, led by BskyB and many believe that the BBC will increase its use of external productions beyond current levels in the future.
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 are starting to drive to demand for production activity – both incremental production and, more importantly, by supporting the economics of ongoing production.
In this environment, we expect to see the industry to continue to grow, potentially at a higher rate than in recent years.