ITV Studios is set to double its business with streaming platforms this year, as the production arm of ITV tries to recover from the pandemic and adjust to radical changes in the global television market.
Julian Bellamy, the head of ITV Studios, told the Financial Times that 2021 would mark a “step change” in its business, with its American division for scripted drama forecast to generate a third of its revenues from streaming services such as Amazon, Apple and Netflix.
The expansion of ITV Studios has been an important part of the push by ITV, which publishes full-year results on Tuesday, to reduce reliance on its UK free-to-air channels. Studios makes about 8,000 hours of television through 55 production houses, accounting for more than a third of the FTSE company’s revenues for the first half of 2020.
The shift to streaming reflects how the market has transformed for production groups such as ITV Studios, which has thrived on selling hit formats such as The Voice and Love Island to traditional television broadcasters around the world.
On the sales side, Bellamy described the business as “increasingly diversified” towards streaming. “You can see the scale of transformation in the US market. We are seeing a lot of activity,” he said. “But in pretty much every market we are in, we are seeing commissions and development from streaming platforms.
“We feel very confident, and we look at it regularly, that the global demand for content will continue to grow at around 3-5 per cent a year,” he added.
With its traditional focus being unscripted television, ITV Studios had to reorientate in recent years to position itself for the boom in demand for high-end dramas.
That shift has included partnerships with Jason Blum’s Blumhouse Television, the maker of The Loudest Voice, and Nicola Shindler, the producer behind It’s a Sin, and Italy’s Cattleya, which produced Suburra.
Notable projects with streaming services include the sci-fi thriller Snowpiercer for TNT and Netflix, 10-Year-Old Tom for HBO Max, and the aerobics drama Physical for Apple.
The coronavirus emergency hit the ITV Studios business, forcing it to suspend the vast majority of 230 shows that were being filmed in early 2020.
Revenue declined 17 per cent to £630m during that period, with £397m coming from external sales. Adjusted operating profits for the six months to August almost halved to £62m, partly because of the increased costs of resuming productions during the pandemic.
Bellamy declined to say whether the pick-up in streaming business was making up for the pressures on spending from advertising-funded, traditional television.
“You can see it is a challenging environment, particularly last year,” he said. “But never underestimate the power and resilience of free to air platforms . . . [some] bring 8, 9, 10 million people on to a platform in a 60 minute window. No streaming platform in the world that can do that.”
Bellamy also stood by ITV’s decision to invest in Jeffrey Katzenberg’s failed short-form streaming venture Quibi. “We invest in things, and hopefully most of them will come off, but not all of them will. And that’s fine,” he said. “If I had my time again, I think we would still do it, because I still think it was such a brave and original and daring idea.”