ITV is to launch what it claims is the UK’s first, combined advertising-funded and subscription video-on-demand service, ITVX.
“ITVX will be viewer led – viewers can choose to watch thousands of hours of content for free in an advertising-funded tier or trade up to a subscription service which provides all that content ad-free,” ITV said.
The new “integrated” AVOD-SVOD platform replaces ITV Hub, which will be dropped as a brand, said chief executive Carolyn McCall as she reported record annual ad revenues, up 24% to £1.96bn, which more than made up for an 11% decline in 2020.
The rise in revenues, which was fuelled in part by media inflation, came despite ITV’s reach declining with total viewing time across its linear and VOD portfolio down 9% in 2021.
ITV acknowledged ITVX is a response to how “viewing habits are changing rapidly” because of the rise of streaming. ITV announced it is moving to a “digital-first” windowing strategy to release “much of its new content” on the new platform ahead of linear TV broadcast.
ITV Hub currently has 4,000 hours of content while ITVX will have around 15,000 hours at launch in Q4 2022.
The “digital-first content investment” will be £20m in 2022 and £160m in 2023 for ITVX, which appeared to alarm some investors as the share price fell sharply on the news.
Chris Kennedy, chief financial officer, said ITVX would debut with about 20 so-called “FAST” channels – a term coined in US television to describe free ad-supported TV channels.
These 20 channels will be a mix of programme brands – for example, for hit shows such as The Only Way Is Essex or Vera – and genre brands, such as true crime or reality.
“This is brilliant news for advertisers,” McCall said, noting that ITVX will give the broadcaster more online inventory and allow the FAST channels to have a lower "ad load".
McCall said: “ITVX will be a free service supported by adverts, with a compelling subscription proposition. This is fantastic for viewers – it will provide a simplified and seamless experience with thousands of hours of free content made up of both library and original exclusive content. The subscription tier will provide a premium offering and includes all of the content ad-free, as well as BritBox and future SVOD content partners.
“We are super-charging our streaming business, fundamentally shifting our focus to think digital first, as well as optimising our broadcast channels, by continuing to attract unrivalled mass audiences. In doing so, we are responding to changing viewing habits, but also the evolving needs of our advertisers. This will enable ITV to continue to be both commercial viewers' and advertisers’ first choice.”
Kevin Lygo, ITV’s managing director of media and entertainment, claimed ITVX would have “more fresh, free content dropping every week than anywhere else”.
The programming chief added: “Our broadcast channels are very important to what we do, and we are still focused on delivering what ITV does better than anyone in commercial TV – creating programmes that bring audiences together in the moment, in their millions, for that shared-viewing, scheduled TV experience.
“However, we know we have to deliver our programmes to as many people as possible in all the ways they want to watch them, and going forward viewers will now see a wide array of shows premiering first on ITVX, which is the cornerstone of ITV’s digital acceleration.”
ITV’s annual pre-tax profits rose 48% to £480m in 2021.
The broadcaster expects ad revenues should be up 16% in Q1 2022 with January up 15%, February up 20% and March up around 13%. Early indications are that total advertising revenue will be up around 10% in April.
ITV’s share price slumped more than 14% in early trading to 95p, partly because of the costs of ITVX.
Shows that will stream first on ITVX, "before arriving six to nine months later on ITV’s broadcast channel", include A Spy Among Friends, starring Damian Lewis and Guy Pearce; Nolly, starring Helena Bonham Carter; Lenny Henry’s six-part drama The Little Birds and Litvinenko, starring David Tennant.