ITV Studios to double scripted output, targets 25% streamer revenues by 2026

Physical

ITV Studios (ITVS) has unveiled plans to double the amount of scripted hours it produces within five years to drive returns from streamers, although FTA and cable broadcasters will still make up 75% of revenue by 2026.

The commercial arm of the UK-based broadcaster set out a number of targets ahead of an investor seminar later today, including growing its “high-end scripted hours” from 200 at present to 400 within five years.

It is also aiming to increase the number of global formats produced in three or more countries from 16 this year to 20 over that same period, with “ambitions” to drive streamer revenue from an expected 16% in 2021 to 25% by 2026.

ITVS’s CFO, David McGraynor, said the average revenue derived from OTT across the market “is around 70% – we’re overly indexed on traditional buyers, so we’re doubling down on continuing our momentum with the streamers.”

Julian Bellamy

ITVS America’s lead

ITVS MD Julian Bellamy, talking to TBI ahead of the seminar, said the “pivot” towards streamers has been exemplified by the company’s US arm, which is doubling its production hours for OTT services next year.

The Global Distribution division’s top two clients are now also streamers, Bellamy continued, and he said an “aggressive talent acquisition strategy” over recent years means ITVS is now positioned to capitalise.

“We’ve been adding creative strength and the talent coming in is the kind that we think will be able to win shows with those streamers,” he said.

ITVS deals of late include Nicola Shindler moving from StudioCanal-owned Red Productions to launch Quay Street Productions, which is behind Nolly for ITV, and the 2020 launch of Bedrock Entertainment in the US.

Bellamy added that Europe also offers “real opportunity” for scripted growth and said he had “a lot of confidence” in existing talent achieving the new 400-hour target by 2026.

New acquisitions were not ruled out, however, with ITVS’s MD describing the company as being “open-minded about investment opportunities” but “very comfortable” with its existing scale.

Bodyguard

Apple’s Physical example & deficit growth

Bellamy was also bullish about the evolving streamer ecosystem, pointing to regional and local streamers such as Viaplay as offering an opportunity to retain rights to programming.

He highlighted that while US streamers have an “impulse to take as many global rights as they can… there is still plenty of scope to take underlying distribution rights,” reflecting the Netflix coproduction deal on Bodyguard, which ITVS has since sold to linear broadcasters.

Bellamy also pointed to Apple TV+ drama Physical, which is produced by ITVS-owned Tomorrow Studios and recently extended into a second season, as another example. “That’s a global deal but we retain some underlying distribution rights and ownership, so while there is an impulse, not every deal is the same.”

Deficit financing is also set to continue rising and McGraynor said Global Distribution’s deficit funding spend of “around £50m a year” will increase as the scripted business expands.

ITVS, which saw revenues slammed during 2020 but improving in 2021, said it expects total revenues to recover to 2019 levels next year.

After that, it predicts “total organic revenues to grow by at least 5% on average per annum”, with margins between 13% and 15%. This, it added, reflects “the changing mix of our revenues as we grow our scripted business and our revenues from streamers.”

Carolyn McCall, ITV CEO, added: “We are operating in a growth market and strategically pivoting our business to align with the key drivers of that growth.”