The most dramatic highlights from Ofcom’s Media Nations 2021 report
Each year Ofcom summarizes how the UK public consumed media. We usually see minor, incremental changes, but in the last few years our habits have altered hugely. The media has been much enjoyed during the pandemic, which has resulted in record shifts.
The 5 things you need to know from Ofcom’s Media Nations 2021 report
Here are what shifts marketers will have to be aware of.
More video consumption – again
In 2020, the UK public consumed a daily average of five hours and 40 minutes of audiovisual content – 47 minutes more than in 2019. There are only 24 hours in the day, and because of lockdowns we invested more time in TV than ever before.
But as lockdowns reduce, you would expect a slump toward historic norms. The difference is these hours may be committed to different platforms than they were pre-pandemic.
In particular, people spent almost twice as much time watching subscription streaming services (one hour and five minutes per day) such as Netflix, Amazon Prime Video and Disney+. It’s worth remembering all video consumption channels increased.
The highest growth was to video-on-demand (VOD) services.
And TikTok viewing ‘grew even more rapidly than YouTube’. Have no doubt, TikTok is taking a bite out of Google’s product (hence why YouTube launched Shorts in response).
Don’t cry for YouTube just yet though. Almost 51bn YouTube videos were viewed by UK adults in the first quarter of 2021, so it’ll be just fine. That’s up 22% year-on-year. Perhaps thanks to a renewed focus on ‘short’ clips...
UK subscriptions to streaming services climbed to 31m last year, up from 20m in 2019. That’s up more than 50%. By September 2020, three in every five UK homes were signed up, compared to half of homes a year earlier.
Most SVOD subscribers are juggling multiple subscriptions and will soon have to make a choice about what’s needed – especially if viewing time decreases as the world opens up again.
16-34-year-olds’ total viewing of broadcaster content was almost the same as in 2019, but broadcaster share of this total declined from 38% to 32% because this group was spending an extra 47 minutes a day with a SVOD service.
The changes are setting in. Research by Ampere Analysis conducted in Q1 2021 found that 42% of SVOD users said they could envisage not watching broadcast TV at all five years from now.
So we now have 31m SVOD subscriptions in the UK. Netflix leads with 14.8m, then Amazon Prime Video at 9.5m. Both added more than three million subscribers each in the year leading to Q3 2020. Booming new entrant Disney+ overtook Now (1.9m) to reach more than 3.4m homes (this service is new to the market and is unlikely to lose momentum with the wealth of Disney and Fox content fueling it).
Revenues generated by the main SVODs hit an estimated £2.11bn in 2020, up 28% in real terms on 2019’s £1.66bn – that’s double 2017’s figure. For Netflix, it’s worth remembering that we’re still unsure if it’s making or losing money. Much of its cashflow is funneled back into content and marketing to ensure it dominates this flourishing space – a space that’s congested with competition.
Meanwhile, our public broadcasters are running a sustainable profit – as long as they maintain their audiences...
Broadcast TV is shriveling
The average time spent watching traditional broadcast TV each day in 2020 increased by nine minutes to three hours 12 minutes, which may sound good, yet the report states: ‘The increase was entirely driven by people aged 45 and over.’
People aged 16-24 spent an hour and 17 minutes watching broadcast content – down four minutes from 2019. Not a dramatic fall, but noticeable.
Broadcast TV’s a winner-takes-all game. Public service and commercial public service channels made up ‘most of the top 20 channels in 2020’, ranked by share of viewing. Their share of viewing was the highest level in six years.
It’s worth pointing out that the BBC iPlayer had a record year. And ITV Hub was down 5% on 2020. It was missing its staples, a couple of beloved soaps and Love Island to drive that demand.
And Channel 4 reported a 26% increase in All 4 views to 1.25bn, with digital accounting for 12.5% of total viewing.
The broadcasters are less concerned about where they’re watched than ever before. It’s easier to go to audiences than bring audiences to you, after all.
TV advertising to rebound – with adaptations
Commercial TV revenues declined 6.4% to £10.2bn in 2020.
The wider UK advertising sector contracted for the first time since 2012. But according to AA/Warc, we’re due the fastest ad spend growth since records began in 1982, and TV spend will grow at double the rate projected for the year in May. It’s clear things are moving fast.
But advertisers aren’t buying the same thing.
Linear TV spot ad revenues have already been in decline. They contracted by 19% (£1bn) between 2015 and 2019. As VOD viewing increases and allows immediate incomes to targeted audiences, the role of the broadcaster is changing, and its incomes are diversifying. BVOD ad revenues grew by 15% year-on-year to £523m and now accounts for 13% of direct TV spend.
And as for advertising-supported video-on-demand (AVOD) services, they ‘have so far had only a limited presence in the UK, and take-up remains low’.
Expect Pluto TV and the Roku Channel to do something about that in the coming years. These firms are hoping more drop out of SVOD viewing and prefer more passive, traditional AVOD viewing that is, importantly, available for free on most TV hardware.
Not so sound
In audio, live radio remains the most common, but it’s a fading habit. The proportion of total audio listening that this represents has declined from 74% to 58% since 2015.
This isn’t news to audio broadcasters, thankfully. Streaming music is taking 17% of time, rather than 5% in 2015.
In Q1 2021, the share of weekly audio time for radio, including live, catch-up and radio podcasts, was 68%. Growth in podcast use appeared to slow during the pandemic, with 15% of adults listening to podcasts on a weekly basis in Q1 2021 – only one percentage point higher than in early 2020.
Industry revenue was down 14% year-on-year. The changes ‘reflect an acceleration of previous trends’.
The industry says
Kristian Claxton, managing partner at Finecast, says: “These findings clearly show that consumers still see the physical TV at home as the single most important consumption medium. It’s a huge opportunity for advertisers engage with them. As catch-up and BVOD gain even more prominence – and the opportunities to harness data that enables – those audience segments can be reached with relevant and creative ads that allow advertisers large and small to engage with those consumers who matter most to them, and actually deliver a more efficient campaign as a result.”
Craig Armer, strategic insight director at Kantar, talks up the importance of original content in the TV wars. “This last year has seen a real challenge for Netflix’s dominance in this space. High-quality exclusives like The Mandalorian and WandaVision continue to play an important role in generating sign-ups to newer challengers such as Disney+, whereas Amazon’s Prime Video service was buoyed by the wider growth of online shopping over the pandemic. Exclusive Premier League games over the Christmas period successfully converted those initially subscribing for free delivery.”
But it’s not everything. He says Netflix is the “clear winner” on user experience, “with over half of all subscribers rating it a nine or 10 out of 10 – something the other services are unable to boast quite yet”.
Jonathan Masterton, trading director at GroupM says: "For marketers it creates an interesting conundrum – where and how to invest. While subscription services are clearly gaining ground, the numbers are clear that broadcaster VOD plays such an important part in these reported viewing numbers, and there’s lots of opportunity to reach consumers throughout the media mix.
"Advertisers need to consider a dynamic strategy that is optimised for each platform, traditional linear, Addressable and digitally severed."