As ITVX banks on World Cup gold, is channel too late to streaming party?

With England roaring into the last 16 and the prospect of maybe, just maybe, airing a quarter-final World Cup clash, the mood at ITV traditionally becomes one of high-fives and talk of bonuses as national fervour turns into advertising gold.

But this time there is much more at stake as the broadcaster rolls out ITVX, an £800m-plus bet on a new national streaming champion fit for the Netflix era, with executives glued to screens hoping it won’t prove to be a digital own goal.

Its existing ITV Hub service has an embarrassing history of live-streaming crashes at crucial moments during football matches of national importance, but failure this time has repercussions far beyond angry fans complaining about frozen screens.

“This is the most ambitious rollout ever in British streaming in terms of its complexity,” says Rufus Radcliffe, managing director of streaming, interactive and data at ITV. “We have dashboards all over the place and will see the sudden ramp up as viewers come online to watch. We will have very big streaming numbers for Senegal, and exponentially bigger if England get to the quarter-finals; it is a big deal for ITV.”

As Dame Carolyn McCall approaches her fifth year running ITV it continues to languish at a market value 60% below when she started in January 2018, and its chief executive is banking on the streaming revolution for a change in fortune. The problem is that whether or not ITVX passes the World Cup test, the streaming arms race for eyeballs appears to have already come to an abrupt end.

Netflix’s once-indomitable share price has more than halved this year while Disney, which has felt the need to bring back former its chief executive Bob Iger to rebalance the world’s biggest entertainment company’s streaming ambitions, has seen almost $260bn (£212bn) wiped off its market value.

The story is the same across the media landscape. Shares in Sky’s owner, Comcast, which runs the Peacock streaming service, are down a third; Channel 5’s owner, Paramount, is down 42%; and the market capitalisation of Warner Bros Discovery, whose chief executive, David Zaslav, has been quick to take action to cut ballooning streaming-induced losses, has more than halved.

In March ITV took a major share price hit as investors balked at plans for a huge streaming investment immediately after Netflix warned that the pandemic-fuelled streaming boom was fizzling out. Nevertheless, it is planning on investing more than £800m trying to make ITVX a must-watch over the next four years.

The broadcaster says it will spend £65m on ITVX this year, £195m next year and then a steady £185m annually – including a £160m content budget – in each of 2024, 2025 and 2026.

Among the series to launch on ITVX are a period drama The Confessions of Frannie Langton; a six-part cold war drama A Spy Among Friends; and Riches, a drama about the super-rich.

“Without exception there has been a streaming bloodbath,” says Alex DeGroote, an independent media analyst. “Unfortunately the market sentiment toward streaming and the horrific level of losses in pursuit of growth has turned on a sixpence. ITV has entered this party late and spending this much feels like a moment in time that has passed.”

ITV is a linear TV juggernaut when content is broadcast in real time via the airwaves and cable. It is home to 93% of the highest-rating programmes on commercial TV, from I’m A Celebrity … Get Me Out of Here to Love Island, driving a record haul of almost £2bn in ad revenues last year.

But management is acutely aware that a big bet needs to be made on the digital future. Viewing of its TV channels declined 11% last year and if there is one advantage to being a late mover, it means avoiding the hugely expensive lessons gleaned from the fall from grace of the big US media and streaming companies.

ITV’s clunky and much-derided existing streaming service, ITV Hub, still managed a 22% increase in viewing hours to 1.04bn last year, while monthly users grew 19% to 9.6 million. And ITV’s total digital revenues grew 40% to £347m, an increasingly sizeable and fast-growing business, with advertising on its streaming service surging 41%.

And there is much growth potential to be had in ITV’s digital streaming foothills: targets have been set for £750m in digital revenues, 2bn hours of annual streams and a doubling of monthly users to 20 million and of subscribers to its premium-paid tier to 2.5 million by 2026.

The call of the ad-funded opportunity, which will be the primary source of income for ITVX, has not been lost on Netflix. Last month it launched its own ad-supported service to reignite growth and drive profitability. Disney is to follow suit with the initial launch of an ad-supported service in the US on 8 December, ahead of a global rollout.

“I wouldn’t say ITVX is make or break for McCall and ITV but I think it needs to succeed,” says DeGroote. “It will be a long decline, but linear TV is in terminal decline. ITV is in desperate need of some good news. They have tried lots of things but never found that silver bullet.”

Even with the weak pound making the UK a bargain to business, and ITV trading cheaply, TV businesses are not the top of an opportunistic buyers’ list. In October, Comcast, which paid £30bn for Sky four years ago, wrote down the value of the pan-European pay-TV business by $8.6bn.

And ITV’s secret lobbying mission to convince ministers it should triumph in an auction of Channel 4 despite immense competition concerns, at a stroke cementing its place as a UK TV powerhouse, has withered as the government appears to have given up on the sale of the state-owned broadcaster.

Transforming ITV, in McCall’s words, into a digital “national champion” is arguably its last strategic gamble.

“We are used to very big streaming numbers coming in,” says Radcliffe. There is no denying the way people are watching TV is changing and we are leaning into that. With the cost of living crisis the need for a free, advertising-led streaming proposition is more timely than ever. This is right for viewers, right for shareholders and is what advertisers want. This is right for ITV.”

With the World Cup in full swing, all ITV needs is not to drop the streaming ball.