ITV announced a 23% rise in total ITV Studios revenue to £458m and an 18% increase in total external revenue in its latest quarterly update on Wednesday due to a vast array of new and returning programmes.
ITV reported total external revenue rose 18% from £709m to £834m in the first quarter with ITV Studios generating revenue of £458m, up 23% from 2021 as a result of new and returning programmes on the network such as Holding, Murder in Provence and Physical S2.
Media and Entertainment revenue increased 13% to £545m from £483m along with a 16% rise in total advertising revenue in the first quarter as a result of “good” demand in the advertising sector.
However, total non-advertising revenue was marginally lower due to the expected decline in SDN revenue offsetting the growth in subscription revenue.
ITV Studios
ITV said that ITV Studios has an exciting pipeline of scripted and unscripted programmes lined up for the coming quarter and the rest of the year as it focuses on diversifying its business on the basis of genre, geography and customer.
The Outlaws, Snowpiercer, Django are some programmes in the scripted category which will continue on, reiterating the strong growth in scripted programmes. Unscripted programmes expected in 2022 are Hell’s Kitchen, The Chase and Love Island.
Global streaming platforms contribute to revenue heavily with commissions coming from programs such as One Piece for Netflix and Love Island USA for Peacock.
ITV said it is concentrating on improving ITV Studios to create a “more sustainable way of working” which includes remote and cloud-based editing and virtual production sets.
Media and Entertainment
The launch of ITVX is on track to be delivered in the fourth quarter which is aimed to strengthen and evolve ITV’s streaming experience.
ITVX aims to have 6,000 hours of content available compared to 4,000 in 2021 including titles such as The Sex Lives of College Girls, The OC and One Tree Hill.
Due to the availability of scripted programmes at the same time as the initial broadcast, drama viewing online has increased 8% to 125m streams in the first quarter.
ITV’s leading addressable advertising platform, Planet V has seen a rise in users by 300 to 1,300 users in Q1, and it saw 50 new digital-only advertisers come to ITV.
ITV Performance
ITV reported a 24% rise in total digital revenue with a 27% increase in digital advertising revenues and a 37% rise in subscription revenues. Streaming hours for TV Hub, ITV Hub+ and BritBox UK rose 8% in the first quarter said the group.
ITV continues to deliver the majority of commercial mass audiences with 93% share of top 1,000 commercial broadcast TV programmes in Q1 compared to 92% in 2021.
ITV Outlook
ITV said ITV Studios is performing strongly and is on the right track to tackle the “strong global demand for content”.
The total advertising revenue for the second quarter is forecast to be down near 6% against strong comparatives in Q2 2021 when TAR was up 89% compared to 2020.
With regards to ITVX, ITV is “well positioned” to launch the free ad-funded streaming service due to its relationships with advertisers and the robust demand for Planet V. The group expects £750m in digital revenues by 2026 with ITVX contribution.
The group is making progress in delivering its cost saving target of £17m for 2022.
ITV shares gained 0.2% to 67.2p in early morning trade on Wednesday following its first quarter update.
Sophie Lund-Yates, Equity Analyst, Hargreaves Lansdown said, “ITV is betting on streaming and its studio productions, as traditional advertising revenue becomes harder to come by in the digital age. That will become an even bigger challenge in the face of economic turmoil.”
“The true final scale of ITV’s digital business is hard to predict, but any market share will be very hard won. ITVX, the free ad-supported streaming service due to come online soon, may be a more attractive option for cost-conscious consumers in the current environment. Getting any sign ups at all will require having an excellent slate of content – good is no longer good enough for today’s discerning binge-watching audiences.”
“ITV Studios has real potential – it’s the UK’s biggest production and distribution company. Providing the content for global streaming giants is an attractive spot to be in. It’s encouraging to see Studios revenue making up a reasonable portion of the whole.”
“Productions are cost intensive though, so plans to make the editing process more efficient make a great deal of sense. The real elevation to margins though is going to come from signing a sustained and elevated number of deals,” Lund-Yates added.