March 2020 Why securing platform carriage deals is vital for BritBox A report prepared by Oliver & Ohlbaum Associates Ltd

Why securing platform carriage deals is vital for BritBox

Summary:

• Ahead of BritBox’s launch in the UK last November our research found that 19 per cent of people were interested in it; we predicted this might translate into 1.7 million subscribers at the end of the first year • Having conducted further research almost four months after launch, we found that only 1.5 per cent of respondents have a subscription, representing around 380,000 subscribers • A further 560,000 have tried the but won’t be subscribing, while 100,000 have already cancelled their paid subscriptions – suggesting that BritBox has failed to capitalise on the initial interest • The net promoter score of -46 indicates that a sizeable majority of consumers would not recommend the service to friends • With Disney+ launching on March 24, following its strong performance in the US, there is a risk that BritBox will struggle to establish itself in the face of significant and increasing competition • If BritBox is to have any chance of success in the UK, ITV and the BBC need to act fast to capitalise on brand recognition, and implement platform carriage deals as soon as possible

BritBox – ITV and the BBC’s subscription (SVoD) service – arrived in the UK last November, offering a library of British content and a small number of original programmes. At a cost of £5.99 per month, BritBox is slightly cheaper than the standard plans from the biggest subscription (SVoD) players in the UK market: costs £8.99 per month, while Prime Video costs £7.99 per month. Competition is fierce though, and these services are also available more cheaply; with Netflix’s basic plan priced at £5.99 (limited to one screen at a time and no HD video), while is available for £6.58 per month if a year is paid for upfront, and includes numerous other benefits.

Almost four months since launch, we wanted to know how successful BritBox has been. So, in collaboration with our research partner, Fly Research, O&O conducted a survey of over 5,000 UK respondents to find out.

What does BritBox offer and how is the SVoD market developing? Alongside recent boxsets, including the BBC’s Rev and Les Misérables, and ITV’s Broadchurch, BritBox offers older episodes of returning hits such as ITV’s Endeavour, as well as a large library of classic ITV and BBC series like Morse, The Good Life, and . Plus, there’s a classic catalogue including Olivier’s Hamlet, Hitchcock’s The 39 Steps, and over a dozen Carry On titles. BritBox has also promised some original programming1 though, at present, the exclusive non-broadcast content is relatively limited, including early releases of the latest and the exclusive import of Lambs of God, an Australian drama. Since launch, BritBox has struck deals with and Channel 5, which will see some of their content added to the service, including some from the catalogue.

As depicted in its marketing campaign, one of BritBox’s USPs is the ability to search by actor, as well as more usual content discovery systems such as A-Z and genre (which is a little harder to access). This is an interesting angle, but ultimately, it is the available content which distinguishes a service. In an increasingly competitive SVoD market, will BritBox offer enough to attract subscribers?

1 We previously estimated the original content budget in the first year might be enough for a couple of high-end drama series: Matthew Moore, ‘Viewers more likely to watch Disney TV than BBC’s BritBox’, The Times, 13 September 2019, https://www.thetimes.co.uk/article/viewers- more-likely-to-watch-disney-tv-than---kq5q23qv7

Oliver & Ohlbaum Associates Ltd 2 Why securing platform carriage deals is vital for BritBox

Consumers already face some tough decisions in terms of where to allocate their entertainment budgets. Around 44 per cent of households subscribe to Netflix, while 25 per cent have Amazon Prime Video, and 6 per cent use ’s NowTV service. With Disney+ due to launch on March 24, this decision on what to pay for will get even harder, and services from other US Studios such as NBCU’s Peacock, Warner’s HBO (albeit likely dependent on the existing HBO licensing deal with Sky Atlantic), and CBS’s CBS All Access – or a new Viacom/CBS equivalent are expected to follow. It has also been announced that Acorn TV, a US SVoD service owned by ITV/BBC’s partner in the USA version of Britbox, AMC, will launch in this year – it will specialise in non-US programming including UK output. But the Disney+ launch probably presents the most immediate challenge to BritBox in the UK.

When Disney+ launches on 24 March, it enters the market at the same price point as BritBox – or for £49.99 if the whole year is paid for upfront (£4.17 a month). The service will offer new content such as the Star Wars series The Mandalorian, along with film titles such as: The Force Awakens, Avengers: Infinity War and Ice Age: Continental Drift, and exclusive programming from the Marvel Universe. The combination of Disney’s strong brand and the broad appeal of its content could see it succeed in the UK. Indeed, a previous O&O survey found that a quarter of UK respondents would be interested in taking up a Disney+ subscription.2

When Disney+ launched in the US last November, at $6.99 per month, estimates suggested it could reach 18 million subscribers worldwide by the end of 2020 3. Our own survey indicated that 42 per cent of respondents were interested in the service, which we predicted might translate into 46 million homes by year three. After just three months, Disney has now signed up 29 million subscribers in the US; and although this is bolstered by a access deal for Verizon customers, it has still significantly surpassed expectations. To put this in context, BritBox had been in the US market for over two years, at same price point, and had a modest 600,000 subscribers at the time of the Disney+ launch.4

How is BritBox performing so far? Our previous survey, conducted prior to the launch of BritBox, found that 19 per cent of respondents were interested in it, which we predicted might translate into 1.7 million subscribers by the end of year one (taking into account respondent’s tendency to overstate their likelihood of committing to a service). On this basis, almost four months after launch, we might have expected the service to have attracted 560,000 subscribers or more. Our new survey sought to test this and asked about respondents’ awareness of BritBox and, where relevant, their experience in using it now that it has launched.

We found that the pre-launch interest from 19 per cent of the population has translated into use by just 6 per cent of respondents, despite a free 30 day trial being available. Indeed, 94 per cent of respondents reported that they hadn’t used BritBox, and at least 26 per cent of respondents had never even heard of the service.

Overall, only 1.5 per cent said they had a subscription – which equates to roughly 380,000 UK households at a national level. This suggests BritBox will struggle to reach our estimate of around 1.7 million subscriptions by the end of its first year (this November). Though there is some hope in the 2.0 per cent of respondents, representing around 500,000 potential subscribers, who reported that they have tried BritBox and might subscribe.

2 Matthew Moore, ‘Viewers more likely to watch Disney TV than BBC’s BritBox’, The Times, 13 September 2019, https://www.thetimes.co.uk/article/viewers-more-likely-to-watch-disney-tv-than-bbcs-britbox-kq5q23qv7 3 Todd Spangler, ‘Disney Plus land grab: analysts up subscriber forecasts with Verizon free-giveaway pact’, Variety, 23 October 2019, https://variety.com/2019/digital/news/disney-plus-subscriber-forecasts-verizon-1203380470/ 4 BritBox was launched in in the following year, priced at CA$8.99 per month. Samuel Roberts, ‘BritBox has launched in the UK, but the streaming service doesn’t feel worth it yet’, Tech Radar, 7 November 2019, https://www.techradar.com/uk/news/britbox-has-launched-in-the- uk-but-the-streaming-service-doesnt-feel-worth-it-yet; Julia Alexander, ‘Disney+ has surpassed 28 million subscribers since launch’, The Verge, 4 February 2020, https://www.theverge.com/2020/2/4/21122106/disney-plus-subscriber-numbers-mandalorian---q1-earnings

Oliver & Ohlbaum Associates Ltd 3 Why securing platform carriage deals is vital for BritBox

If all of respondents who reported that they ‘might subscribe’ could be persuaded to sign up by November, BritBox might end year one with a total subscription base of almost 880,000 subscribers – even if it did not persuade any of those who have not yet shown an interest in it to sign up.

UK respondents’ awareness of BritBox 67.6%

26.0%

2.2% 2.0% 1.5% 0.4% 0.3%

I think I’ve heard of No – never heard of Tried but won’t Tried & might Currently a paid Subscribed in the Access via somebody it but never used it it subscribe subscribe subscriber past but not now else’s subscription

Note: Have you ever heard of, or tried, any of the following subscription video on demand services [BritBox]? Source: Fly Research (n=5,104), Oliver & Ohlbaum analysis

Perhaps most concerning though, is the fact that 2.6 per cent of respondents, representing around 660,000 households reported that they have tried the service and either won’t subscribe after the free trial (560,000) or have cancelled their subscription already (100,000). This suggests that, like Disney+ in the US, BritBox may have benefited from a surge of interest at launch; but unlike Disney+, BritBox has not been good enough to retain those who were interested.

To try to understand more about why so few people are interested, we asked those who have used the service whether they agree or disagree with a series of statements about BritBox. The most common response across the majority of the statements was ‘neutral’, indicating a general sense of apathy around the service. While there are undoubtedly some positives, with a significant minority (39 per cent) reporting that the service is very good value for money, and 58 per cent agreeing that it’s great to revisit their favourite TV from the past, there are clear signs explaining the subdued performance to date.

DISAGREE AGREE

17% 44 39% V. good value for money

Initially interesting but won’t keep my 36

25% 39% attention for long General 23% 42 35% Love it and will be a long-term fan

14% 28 58% Great to revisit favourite TV from the past

13% 41 46% Huge number of v. interesting shows

28% 37 35% Interested but only for 1 or 2 shows

Content Content / quality I’d forgotten how poor the quality was 30% 40 30% for TV shows in the past

# % of respondents reporting they were ‘neutral’

Oliver & Ohlbaum Associates Ltd 4 Why securing platform carriage deals is vital for BritBox

DISAGREE AGREE

12% 42 46% Video streams have worked perfectly

34% 37 29% Experienced technical problems

Struggled to find a way to watch that 34% 39 27%

actually worked User experience User

# % of respondents reporting they were ‘neutral’ Source: Fly Research (n=327), Oliver & Ohlbaum analysis

Of those who have tried the service, 39 per cent reported that it would not keep their attention for long, while 35 per cent were only interested in one or two shows, and 30 per cent had forgotten how poor the quality of past TV shows was. Furthermore, 29 per cent had experienced technical difficulties, and 27 per cent struggled to find a way to watch that worked. Perhaps most tellingly, the service received a Net Promoter Score of -46 (the percentage of “promoters” minus “detractors”), indicating that in general, users would not recommend the service to their friends.

These limitations, and such a low net promoter score amongst those most interested in the service clearly indicate that it will be challenging to attract new subscribers from outside the core interest group – i.e. those who have not yet tried it despite the marketing campaign and the availability of a free trial.

What next for BritBox? According to third-party reports, BritBox has lined up partnerships with Freeview and YouView, integrations on and Fire TV, TVs, and a deal with EE which will see subscribers to the mobile provider potentially getting a six-month free subscription (starting from mid-March) – all of which are steps in the right direction. It has not, however, reached agreements with Sky or Virgin, with the former saying it was highly unlikely that it would strike a deal with BritBox5, though it does expect to offer Disney+, which could be integrated into its core user interface.6

While the Samsung deal appears to already be in action, other carriage deals are yet to be implemented, so BritBox will likely only have a presence on these platforms once Disney+ has already launched, meaning it may have missed another opportunity to establish itself before competition intensifies.

Increasing visibility of BritBox is going to be key; actioning these carriage deals as soon as possible should be the priority, but the ultimate question will still remain: is there a place for a service specialising in mainly ‘golden oldies’, in the golden age of ?

5 ‘Sky sidelines BritBox’, informitiv, 15 December 2019, https://informitv.com/2019/12/15/sky-sidelines-britbox/; Julian Clover, ‘BritBox struggling to get Sky carriage’, TV News, 16 December 2019, https://www.broadbandtvnews.com/2019/12/16/britbox-struggling- to-get-sky-carriage/; Manori Ravindran, ‘BritBox launches, signs up Channel 4 and secures EE distribution deal’, Digital TV Europe, 7 November 2019, https://www.digitaltveurope.com/2019/11/07/britbox-launches-signs-up-channel-4-and-secures-ee-distribution-deal/ 6 Christopher Williams, ‘Sky on the brink of sealing deal to bring Disney+ to millions of British homes’, The Telegraph, 25 January 2020, https://www.telegraph.co.uk/business/2020/01/25/sky-brink-sealing-exclusive-deal-bring-disney-millions-british/

Oliver & Ohlbaum Associates Ltd 5 Why securing platform carriage deals is vital for BritBox

Survey methodology Fieldwork was conducted between 20th and 23rd February 2020. Total number of respondents, weighted by age and gender to be nationally representative, was 5,104. Of these 5,104 respondents, 327 who had used BritBox were asked follow up questions about their experience.

Oliver & Ohlbaum Associates Ltd 6