Netflix & Disney+ take UK revenues to record $4.9bn, but Pact warns of 2023 downturn

Sex Education

Streaming commissions from Netflix, Disney+ and Apple TV+ helped push TV production revenues in the UK to their highest ever levels, but UK trade body Pact has warned that the picture next year is likely to look very different.

The 2023 Pact Census reported TV sector revenues had risen 21% on 2021’s figures to reach a record £3.94bn ($4.86bn), with global streamers such as Netflix, Amazon and Disney+ increasing spending on UK productions by 133% to £696m.

Overall, revenue from international sources grew 70% to reach £1.62bn, with Pact putting the surge down to the return of productions such as The Crown and Sex Education on Netflix, as well as the entrance of Disney+ and Apple TV+ into the market.

The Crown

Spending is, however, expected to be markedly different next year, with streamers such as Disney+ cutting spending on international shows such as Nautilus.

Top-end surge & rights decline

The annual report, which this year was based on 83 responses from companies estimated to contribute 84% of total industry turnover, also highlighted the plight of small indies, with pre-pandemic growth largely helping mid and large sized producers.

While companies with a turnover of above £70m accounted for only 12% of the UK’s total number of production firms in 2022, they secured more than half (51%) of all commissioning spend (domestic and international). That is up from 44% in 2021 and 34% in 2020, while the ratio stood at 43% a decade ago.

Specifically on the international front, the 12% of production companies with revenues of £70m+ secured 54% of revenue from global commissions.

Sales of finished programming were down to £191m from £224m, with a decline in overall secondary rights revenue (which includes distribution advances, home entertainment and merchandise) to £407m, down £102m on 2021.

Pact attributed the drop-off to the increase in streaming activity, which had until recently seen streamers largely taking all rights.

John McVay

Factual entertainment was among genres to experience a decline in spending, down 6%, while the proportion of spend on drama has all but plateaued, making up 37% of the total revenue. That is 2% up on 2021 but not as high as the peak of 40% in 2019.

2022’s commissioning surge

Domestic TV revenues also experienced slight growth, reaching their highest ever level of £2.21bn, with streaming orders from local players such as the BBC’s iPlayer and ITVX hitting £155m, 129% up on the figure from 2021.

Pact CEO John McVay said the headline figures reflected “confidence in the UK market” from international buyers but admitted that 2022 would lkely be “an exceptional year due to the recovery from the pandemic and the commissioning boom.”

He added: “With the cost-of-living crisis, the situation with Ukraine, rising inflation – we recognise that 2023 so far has been a much tougher year and this is likely to be reflected in next year’s Census.

“Additionally, the Census shows an increase in domestic spend illustrating how over-commissioning by UK broadcasters has contributed to a difficult 2023 with people out of work for long periods of time.”

Overall commissioning revenues rose by 29% to £3.31bn, with UK primary commissions increasing by 4.7% to their highest ever level of £1.99bn.

Primary international commissions almost doubled (97%) to a new high of £1.3bn.

The BBC was the largest spender on new programming, increasing its share of commissioning spend in new programming to 41% in 2022, from 27% in 2021.