New research by Apex Insight has revealed that UK TV production has continued to grow despite pressure on television industry revenues, leading to a market worth £3 billion.
Overall, Apex says that the total value of UK television commissions and the market in general have experienced modest but sustained growth during the turbulent economic climate of recent years.
Even though traditional public service broadcast (PSB) channels still account for over 80% of the market, the research found that growth has been driven by the multi-channel segment, led by BSkyB, which has, in recent years, started to commission more original UK programming than in the past. While the largest television producers remain the two major in-house production arms of the leading networks, BBC and ITV, the research noted the rise of the superindies groups such as Endemol, FreemantleMedia and Zodiak.
The analyst regards the industry as being at “an exciting point” and continuing to develop, but with significant areas of uncertainty. It observes that traditional broadcasters remain the major commissioners of content but they face revenue challenges from the internet competing increasingly successfully for advertising revenue and the licence fee freeze. Moreover, Apex feels that new funding models such as deficit funding may change the economics of the industry as it becomes increasingly international and that further acquisitions in, and consolidation of, the independent production sector appear to be likely. Newer media areas, such as IPTV, could further stimulate demand for content – if they are successful.
However, the research also conceded that the most important driver of value in TV production was hit rate in developing the highly successful formats, something which production houses find hardest to predict.
Apex adds though that shows of this nature, such as Big Brother and X-Factor, help production companies to deal with the relatively low revenue visibility which they have in a project-based business, as it is generally more profitable and less risky to invest in extending the life of an existing successful format than to create another new hit.