Netflix, Amazon Prime and others overtake pay TV subscribers in the UK for the first time
Streaming services such as Netflix and Amazon Prime have overtaken pay TV subscriptions in the U.K. for the first time, marking a major shift in viewing habits.
The three most popular online streaming services, Netflix, Amazon Prime and Now TV, had 15.4 million U.K. subscribers for the first quarter of 2018, while there were 15.1 million subscribers to services such as Sky, Virgin Media and BT.
According to a new report by British TV regulator Ofcom, Amazon Prime had 4.8 million U.K. subscribers in the first quarter of the year, up 32.7 percent on the same quarter last year, while Netflix had 9.1 million, up 32.2 percent.
Original content is a key reason for subscribing to streaming services. Thirty-eight percent of Netflix subscribers said they did so “to watch original series made by the provider,” (such as "Queer Eye," pictured) according to data from GfK included in the Ofcom report. Almost a third (32 percent) of Netflix users and 20 percent of Amazon Prime subscribers said the reason was “to watch exclusive content not available elsewhere.”
The U.K. figures may be a boon to Netflix, which overestimated the number of subscribers it gained in the second quarter of the year, according to its results released this week. It added 4.47 million international subscribers versus a projected 5.11 million, with shares tumbling more than 14 percent at one point on Monday.
Changing viewing habits
The findings reflect the U.K.’s changing viewing habits, which are particularly marked in younger viewers. Broadcast — or traditional TV channels such as the BBC — still take the largest percentage of viewing time, an average of 71 percent across all age-groups, but the figure drops to 46 percent for 16 to 34-year-olds.
Subscription revenues for online services such as Netflix and Amazon Prime and ad-funded models such as YouTube, increased 25 percent to reach £2.26 billion ($2.95 billion). TV ad revenues declined by 7.5 percent to £3.9 billion and pay-TV subscription revenues, to services such as Sky, dropped by 2.7 percent to £6.4 billion.
Sky is the subject of a takeover battle between Fox, which has bid about $32.5 billion, and Comcast, which has offered $34 billion.
Ofcom’s Chief Executive Sharon White said in an online statement: “Today’s research finds that what we watch and how we watch it are changing rapidly, which has profound implications for U.K. television.”
“We have seen a decline in revenues for pay TV, a fall in spending on new programs by our public service broadcasters, and the growth of global video streaming giants. These challenges cannot be underestimated.”
Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.