David Farnor | On 10, Aug 2015

Online TV revenue continues to climb quickly in the UK, as viewing habits slowly shift.

The main way people watch programmes continues to be at the time of broadcast, but viewing of traditional live television fell from 3 hours 45
minutes (225 minutes) per person per day in 2010 to 3 hours 13 minutes (193
minutes) in 2014, according to new figures from Ofcom. Watching programmes previously recorded on devices or through catch-up services (known as “time-shifted” viewing), on the other hand, has grown from 17 minutes a day to 27 minutes a day over the same period.

As a result, online TV revenue in the UK has increased rapidly in the past five years, from £95m in 2009 to £793m in 2014, according to data from IHS. Although still small relative to the overall TV market in terms of revenue, income from online TV grew by 38 per cent year on year.

A significant part of that is driven by subscription services, which offer both affordability and flexibility to users. Indeed, the subscription model for online audio-visual content access saw revenue grow by 53 per cent in 2014 to reach £317m, driven predominantly by services such as Netflix and Amazon Prime Instant Video. The subscription model now represents the principal contributor to overall online TV revenues, accounting for 40 per cent of the total.

SVOD services are entering the living room too. Around a third of users who have their TV hooked up to the web watch TV programmes or films via a free catch-up service from public service broadcasters (e.g. BBC iPlayer, ITV Player, All4, or Demand5). This figure rises to 45 per cent among adults aged 35 to 44 years. Other common online activities carried out by connected-TV owners are watching short video clips (21 per cent) and watching free VoD content as part of a TV subscription service (e.g. Sky, Virgin Media). But over-the-top services, such as Netflix and Amazon Prime Instant, are becoming increasingly popular away from the computer, with 15 per cent of all adults using their TV to access these services, rising to around a quarter (23 per cent) among 35 to 44 year olds.

Another factor in the rise of on-demand viewing is the genre of programming. Certain formats, such as news, sport and current affairs are still typically watched live on traditional TV. Less topical content, such as drama and soaps, are the most time-shifted genres: viewing of these programmes other than at the time of broadcast has increased substantially. Time-shifting of drama, which includes US and other international shows, has risen from 9 per cent in 2008 to 32 per cent in 2014. Recorded and catch-up viewing of UK soaps grew from 6 per cent to 23 per cent, across the same period. VOD viewing of UK drama was up from 7 per cent to 22 per cent in 2014.

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