UK broadcaster Channel 4 to refocus on digital content: An analysis
Channel 4 has announced it no longer sees its future in linear television, but will its digital-first content approach work?
Last week, UK broadcaster Channel 4 announced it will begin to shift away from its traditional TV model in favour of digital-first content.
Channel 4’s director of programmes said the shift will include a programming commission strategy that is more tailored to online audiences, mainly those who prefer the broadcaster’s online streaming service, All 4.
In broad strokes, this strategy is seemingly designed to future-proof Channel 4. The type of programming it currently commissions for All 4 is targeted at younger audiences, such as irreverent comedies and popular docu-series.
The biggest question is how this will affect Channel 4 as a business. Currently, the broadcaster relies heavily on traditional TV advertising for income. However, Channel 4 hopes to have replaced 40% of this revenue stream with an all-digital one by 2025.
But will it work?
The target of replacing 40% of its TV advertising income with digital revenue streams by 2025 is a challenging one, but current forecasts suggest it can be done.
The broadcaster will need to leverage multiple sources of income to achieve this. Its top priority will be to increase paid subscriptions of All 4, which removes advertising on the free platform for paying customers.
The freemium model it currently employs, offering content at no cost to the consumer but recouping profits with advertising, is a tried and tested model for boosting paid subscriptions.
The strategy here is that Channel 4 attracts a large, loyal audience by removing the barriers to entry on its content. Over time, once that audience begins to cull its pay-TV subscriptions, it will be more willing to pay for online streaming.
But can it reach enough subscribers in five years?
Grabyo’s At Home Video Trends (UK) report, released in July 2020, found that by 2025, 60% of the UK’s paying video customers expect to have cut the cord.
With the majority of UK consumers only paying for digital services, Channel 4 will have the opportunity to capture these customers. However, the critical difference between growing a TV audience and streaming subscriber base is that online audiences follow the content, not the publisher. By 2025, Channel 4 needs a strong slate of VOD and live programming in place – something it has already begun to address.
Digital content ads
Solely relying on subscriptions will not be enough for Channel 4 to replace its TV advertising revenue in the long term. As it shifts focus to digital platforms, it will need to ensure it is maximizing its content assets online.
In the short term, focusing on digital content for All 4 will allow it to boost sales of advertising on the All 4 platform, but as its subscription base grows, fewer eyeballs will see these ads. At this point, it will need to focus on social media advertising and sponsorship.
Broadcasters across the globe are successfully monetizing their content through Twitter in-stream advertising or YouTube ads.
Real-time content, such as Channel 4 news or sport, will be of most interest to advertisers as this content attracts the most views on social media.
They are delighted and so they should be 👏— Channel 4 Sport (@C4Sport) November 29, 2020
Giorgi Kveseladze crosses the line with a superb solo try to grab Georgia’s first score in the @autumnnations 🇬🇪#C4Rugby #IREvGEO #AutumnNationsCup pic.twitter.com/rOnuRsAwfM
Channel 4 may also look into live social video – bespoke live broadcasts for social media platforms. During 2020, the popularity of these broadcasts have spiked and retained a high level of interest.
Live social broadcasts attract highly engaged audiences and give any sponsor partners high exposure. This could be a special news broadcast, chat shows with Channel 4 talent, or one-off live episodes of content.
The shift to digital online viewing is well underway in the UK, and by being among the first broadcasters to recognize the need for a change of direction, Channel 4 could be set to thrive in the years to come.
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