22 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 23 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I Growing our Further diversifying our The percentage of ITV Studios total revenues Attracting and retaining C R from streaming platforms increased to 32% E Global Formats businesscustomer base leading talent P (2022: 22%) in 2023 and exceeds our 2026 O Unscripted content also remains important As the demand for content from streaming A key part of ITV Studios investment strategy R to ITV Studios. Through our Global platforms grows globally, this presents a target of 30%. This has been impacted by and its overall success is its ability to attract T the phasing of large deliveries in the year Partnerships business, we monetise our significant opportunity for ITV Studios to and therefore we are maintaining our target and retain the best creative talent. ITV portfolio of some of the world’s most further diversify its customer base and at 30%. Deliveries in 2023 included the Studios offers talent a unique combination of successful travelling entertainment formats, remains a key priority of ITV Studios strategy following for Netflix: Fool Me Once – one creative independence, an entrepreneurial as well as maximise commercial to grow its market share and meet its 2026 of their all-time top 10 English language culture, and the resources of a global studio opportunities from our brands. We are KPI targets.dramas, Squid Game: The Challenge, business. This includes access to ITV Studios focused on driving growth across our One Piece, and SUBURRÆTERNA; Playdate global distribution network, and in the UK, unscripted offering by monetising our In the US, we have well-established and for Disney+; Franklin, Physical and Big Beasts the benefit of being a vertically integrated existing high-value formats effectively trusted relationships with all the major for Apple TV+; Twin Love for Amazon; and producer broadcaster and streamer. We are as well as supporting the creation of new streaming platforms. We currently have Love Island US and Love Island Games proud to be able to continue to attract the global formats.scripted or unscripted projects either in for Peacock. best talent in the market, most recently development or commissioned by all of welcoming Plimsoll Productions, Lingo Our portfolio of world-class brands includes them. In 2023, over 40% of US unscripted Whilst further diversifying our customer base Pictures and Ben Stephenson, who set up our established formats such as The Voice revenues and nearly 100% of US scripted with streaming platforms is a key strategic a transatlantic scripted label, Poison Pen (one of the most successful unscripted revenues came from streaming platforms.priority for ITV Studios, it requires careful Studios, in ITV Studios. format brands in the world), Love Island, The management of our working capital as Chase, Come Dine With Me, Hell’s Kitchen streaming platforms typically expect ITV has successfully integrated its new and I’m A Celebrity…Get Me Out Of Here!. extended payment profiles. In some labels – many set up through recent talent These formats continue to sell in new instances, it may also limit our ability to deals – and they have delivered an territories and attract mass audiences for maintain all rights for high-value scripted impressive slate of programmes, including our clients. They are highly sought after by titles as streaming platforms usually seek A Year On Planet Earth and Big Beasts, both both traditional broadcasters and streaming worldwide distribution rights for original from Plimsoll Productions in the UK, Prosper platforms, offering cost-effective content commissions, in return for a premium fee from Lingo Pictures in Australia, Fool Me with a proven track record of audience on commissions. Once, Playdate and After the Flood from success. We also have several new formats Quay Street Productions in the UK, and Night that have been commissioned in our UK, US SQUID GAME: THE CHALLENGE is a reality competition in Paradise from Windlight Pictures in and international production bases, with the series produced by The Garden (an ITV Studios label) for Germany. This strong pipeline demonstrates potential to be future global hits. These Netflix. It was one of Netflix’s most-watched unscripted ITV Studios commitment and success in include My Mum, Your Dad (our first global originals in 2023. Image courtesy of Netflix. nurturing and leveraging top creative talent format to originate from the US); I Kissed A to deliver engaging and high-quality content. Boy; and Make Love Fake Love. As well as protecting our biggest brands, we ITV Studios 2023 financial performance are also focused on expanding our franchises by creating successful spin-offs that allow us 2023 2022 Change Change Organic Change* Twelve months to 31 December £m £m £m % % to evolve existing formats. Examples include ITV Studios UK 962 822 140 17 16 The Voice, which now has six spin-off versions; Love Island has two new spin-offs, ITV Studios US 395 467 (72) (15) (13) Love Island Games and Love Island All Stars; ITV Studios International 445 465 (20) (4) (8) and I’m A Celebrity…Get Me Out Of Here! Global Partnerships 368 342 26 8 8 South Africa is a new spin-off in the UK.Total ITV Studios revenue 2,170 2,096 74 4 3 Total ITV Studios costs (1,884) (1,837) (47) (3) (2) In 2023, across our Global Partnerships Total ITV Studios adjusted EBITA** 286 259 27 10 8 business, we sold 63 unique formats internationally (2022: 64), 19 of which were ITV Studios adjusted EBITA margin 13.2% 12.4% sold to three or more countries (2022: 19). * The organic change assumes exchange rates remain consistent with the comparative period and it removes the impact of acquisitions in the current or comparative period. By 2026, we expect to have 20 such formats, ** Includes the benefit of production tax credits. Refer to Alternative Performance Measures for key adjustments to EBITA and adjusted EBITA. with a view that one of these may be a significant new format like The Voice or 2023 2022 Change Change Love Island. Twelve months to 31 December £m £m £m % LOVE ISLAND Sales from ITV Studios to M&E 629 611 18 3 Our Global Partnerships business also ALL STARS is a External revenue 1,541 1,485 56 4 focuses on leveraging our vast content reality series and Total ITV Studios revenue 2,170 2,096 74 4 library and maximising the value of both is a spin-off from the globally successful primary and secondary windows with FTA format, Love Island. broadcasters, Pay TV and streaming platforms – a growth area for the business. SUBURRÆTERNA 2023 2022 Change Change is an Italian crime drama Twelve months to 31 December £m £m £m % Global Partnerships has recently launched produced by Cattleya 1 a collection of owned and operated FAST1 (an ITV Studios label) for Scripted 802 723 79 11 channels across the world which features Netflix. Image courtesy Unscripted 1,057 1,038 19 2 our content, on platforms such as Pluto, of Netflix.Core ITV2 and Other 311 335 (24) (7) Samsung and Rakuten. This aligns with Total ITV Studios revenue 2,170 2,096 74 4 the business strategically positioning itself 1. Includes high-end scripted and other scripted revenues to adapt to the evolving media landscape, 2. Core ITV includes the soaps and daytime shows produced by ITV Studios for ITV1 taking advantage of various distribution channels and platforms to reach a global audience. 1. Free Ad-supported Streaming TV