6 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 7 S T OUR KEY STAKEHOLDERS MARKET REVIEW R A T E G I Our strategy is aligned with the requirements of each of our stakeholders The markets in which we operate are dynamic, increasingly competitive C R E P so that we are creating and delivering value for all. and rapidly changing. The global content market is large and aractive, O R with all platforms needing access to the best content to aract viewers T at scale. Ongoing changes in viewing habits, coupled with an ever-evolving CUSTOMERS VIEWERS AND SUBSCRIBERS PARTNERS advertising landscape, bring both challenges and opportunities to ITV. Including but not limited to the Our content offering is varied and We collaborate closely with our TREND ONE TREND TWO TREND THREE following: high quality, which audiences can partners and aim to cultivate watch and engage with, for free or strong working relationships. We Global demand for content Fragmentation in viewing The UK advertising market Agencies and advertisers through a subscription, across a ensure all suppliers understand The global content market is large and attractive and changing habits The UK advertising market is worth £36 billion, We deliver advertisers value variety of channels and platforms and adhere to our Supplier Code with all platforms needing a mix of content to While the average viewing time per person per day growing at 7% compound annual growth rate through a unique combination in a trusted, brand-safe of Conduct. succeed in a very competitive market. Going remains stable at 4.5-5 hours per day (Source: (CAGR) in the past decade. Growth slowed in 2023 environment. forward we expect to see growth in key segments Ofcom), the competitor set has become (forecast to be +3% in 2023 vs. +9% in 2022), with of mass simultaneous reach on of the global content market in which we operate, high inflation leading to reduced marketing our linear TV channels, targeted increasingly fragmented over time. From PSBs (e.g. including content licensing, streamers demand for BBC, ITV), to global streaming services (e.g. Netflix, budgets. There was also a decrease in venture digital advertising powered by unscripted content and cost effective premium Disney+), and user-generated video-sharing capital funding, which had funded significant Planet V – our proprietary scripted content. 2024 will be impacted by the platforms (e.g. YouTube, TikTok), viewers now have advertising activity in recent years from new adtech platform, and through 2023 US writers and actors strikes delaying an unparalleled level of choice and flexibility about market entrants. commercial and creative productions until 2025 and weaker demand from what, how, where and when they watch content. Total market growth has largely been driven by partnerships around our quality free-to-air broadcasters (FTA) in Europe who are online advertising, which is expected to be up 5% in holding back spend until they see more certainty 2023 and up 16% CAGR over the last ten years. programme brands on our linear in the advertising market. channels and ITVX. Online is the largest category of advertising spend (75% of the market) followed by TV advertising Broadcasters, networks and (14% of the market). (Source: AA WARC). streamers The TV advertising market is increasingly competitive, We deliver high-quality TV OUR COLLEAGUES, PROGRAMME CITIZENS with global streaming platforms (Amazon, Netflix, productions globally, across a PARTICIPANTS AND EVERYONE Disney+) having now launched, or shortly set to range of genres which WE WORK WITH launch, streaming advertising propositions. broadcasters and streamers can monetise through their own We protect, invest in and develop As a Public Service Broadcaster business models. our on and off-screen talent, (PSB) in the UK, ITV can help Size of global content market in 2023 Average viewing time per person per day 2023 UK advertising market and create a culture that shape culture for good. Our $226bn 4 hours 28 mins £36bn Platforms nurtures them to be productive, provision of free, universally We have strong relationships with commercial and creative. People, accessible, high-quality content (Source: Estimate from Ampere Analysis: (Source: Ofcom Media Nations. Previous 5-year (Source: AA WARC. 2022: £35 billion) aggregators who broadcast our and their physical and mental along with a trusted news service, Feb 2024 – excludes spend from film studios) average of 5 hours per day – incl. COVID-19 years) content and pay us for its health and safety, are our priority helps to inform citizens, shape inclusion on their platforms. at ITV. public sentiment, drive national How we are responding How we are responding How we are responding conversations and support Delivery of ITV Studios’ strategic priorities will As a commercial PSB in the UK, we provide the ITV offers our advertising clients something no democratic debate. ensure ITV gains share over the medium term. By nation with the flexibility to watch content streamer can – mass simultaneous reach, targeted expanding our scripted and unscripted business whenever and wherever, while maximising advertising at scale and commercial and creative Refer to the Refer to and further diversifying our customer base, ITV commercial value. partnerships in a brand-safe environment. This Our People section Social Purpose can capture the growth in content spend in key In December 2022, we launched ITVX which remains a considerable market differentiator along for further details. for further details. segments in which we operate including licensing provided a step-change in ITV’s streaming offering with our deep, established relationships with and demand from streaming platforms for and now has over 17,000 hours of free content. advertisers and agencies. unscripted content and cost-effective premium This has led to significant growth year-on-year in ITV’s FTA linear TV channels offer unique scale and scripted content. monthly active users of our streaming service, up reach and it remains a cost-efficient and important Growing our global formats ensures we have a 19% and streaming hours, up 26%. part of marketing campaigns. range of high-value formats which we can monetise Live viewing, whether via ITVX or on linear TV ITVX delivers the scale and breadth of digital SHAREHOLDERS, DEBT PROVIDERS LEGISLATORS AND REGULATORS See Our Commitment to Section internationally, through production, format sales channels, remains a major focus: ITV is home to audiences which provides inventory for Planet V, AND ANALYSTS and licensing. Our distribution business can also more commercial audiences of scale than any our addressable advertising platform, to create and 172 and the Stakeholder capitalise on the value of our extensive catalogue Engagement section for further of formats and scripted content. This contributes other broadcaster or streaming platform in the UK. deliver targeted advertising at scale. This details of ITV’s key to our higher overall ITV Studios margin relative to In 2024, we will invest around £1.275 billion in underpins our ability to compete for digital video Through the successful execution ITV takes its responsibilities and stakeholders and how we our industry peers. high-quality, trusted content across a wide range budgets and gain share in this growing addressable of genres, including large family entertainment advertising market, illustrated by our 19% growth in of our strategic priorities, we will obligations as a PSB seriously and engage with them. As a vertically integrated producer broadcaster and digital revenues in 2023. create value for and deliver conducts business in line with the streamer, ITV Studios also benefits from demand shows, sport, drama, and news which will drive returns for our investors (equity appropriate laws and regulations, for its content from ITV’s FTA linear TV channels both video on demand and live viewing on ITVX, and our free advertiser-funded streaming service, and mass audiences on linear TV channels. and debt). to ensure we operate ethically and responsibly. ITVX, providing M&E with a strong and secure content supply. Link to risk Link to strategy Link to risk Link to strategy Link to risk Link to strategy Refer to the 2 E 4 S O 3 S O Investment Proposition section Key E Expand Studios globally S Supercharge Streaming O Optimise Broadcast for further details. Refer to the Strategy section in the CEO’s Statement and to the Operating and Financial Performance Review for further details