American streaming services such as Netflix and Amazon’s Prime Video cut the amount they spent on British-made shows for the first time last year, as the UK’s traditional broadcasters invested a record amount in a fightback against the global streamers.
The BBC, ITV, Channel 4 and Channel 5 spend on programmes from UK production companies rose 12% to a record £1.45bn last year, bouncing back from a decade low in 2020 when the Covid pandemic shut the industry down.
Outlay by pay-TV companies, led by Sky, also reached a new high of £443m, highlighting the resurgence of traditional broadcasters in the battle for viewers being waged with streaming platforms whose growth models are coming under increasing scrutiny by investors and analysts.
“Increased competition from international streamers, as well as Covid-related production backlogs, have driven these increases as broadcasters look to bolster their portfolio of original programming,” said Pact, the body that represents independent UK production companies and published the annual report based on almost 200 members.
Viewers have been spoiled for choice for drama in particular, with spend on the genre bouncing back to pre-pandemic levels last year, including Vigil and The Outlaws on the BBC, Channel 4’s It’s a Sin and ITV’s Trigger Point.
The Pact report shows that before last year the main public service broadcasters and Sky had not significantly increased their spend on making flagship new shows, despite the huge increase in investment from US streaming services over the last decade.
“Broadcasters complain about the deep pockets of the streamers but they have not really been stepping up to the plate,” said John McVay, the chief executive of Pact, which published its annual report on Wednesday.
“If you look at spend on domestic content, it has been mostly flat over the last decade – a real-terms decline when inflation is taken into account. You can’t complain about Netflix’s deep pockets when you are not investing more in content in a highly competitive market.”
However, international streaming services such as Netflix and Amazon, makers of shows including Bridgerton, The Crown and All or Nothing: Arsenal, reduced their spend on UK-made shows by 16% last year to £299m. That was the lowest level of spend since 2018, according to Pact.
McVay distanced the dip from the recent reassessment of the subscription video-on-demand market, following Netflix reporting its first loss in subscribers in a decade, or a shift of budgets to other countries as the cost of productions soar in the UK.
“I don’t think Netflix is robbing Britain to pay France,” McVay said. “The UK is one of its most important production hubs. I think next year we will see [international streamer] spend go back to pre-pandemic levels.”
Total revenues of the UK’s hundreds of independent production companies, including from selling shows and hit formats to overseas broadcasters, rose 13% to £3.25bn last year – just £79m below pre-pandemic revenues in 2019.
“It is encouraging to see that the production sector has made such a strong recovery following the pandemic,” McVay said. “But clearly Covid-related challenges still remain, including a lack of viable insurance options for producers.”
