Richard Curran: 'Disrupters face disruption in battle for the future of TV'
Traditional TV companies have to become more like streamers to stand a chance
Love Island has been an extraordinary success for ITV. It has brought in massive viewership numbers, entertained, and to some extent got people talking about a TV show at the water cooler. Even those who have never seen it end up discussing it, by telling others they have never watched it.
It has also been a triumph for the medium of old-fashioned terrestrial television, which has been overshadowed by the online streaming giants who have truly disrupted the entire media landscape.
Of course, thinking that Love Island might be the saviour of terrestrial television is not exactly encouraging but, hey, television executives will argue that they have to try something.
Irrespective of the success of Love Island, with its record six million viewers in Britain, traditional TV has been in trouble for some time.
Look at the ravaging of sport on the BBC as it lost so much of its live coverage to the likes of Sky. Take the fact that before yesterday's financial results, ITV's advertising revenues were down 7pc in the first quarter of 2019.
Closer to home, we have seen the financial challenges at RTÉ, which reported a €13m deficit last year.
The traditional TV model seems to have been lost to the streamers and the pay-per-viewers.
Online streamers, like Netflix, have stolen a march on traditional TV companies. Netflix has offered a strong product at a relatively low price. It has been the ultimate disrupter, having signed up 125 million subscribers in its first seven years in business.
But, last week, something interesting happened with Netflix's second-quarter results. It missed its target for subscriber growth.
This is not the first time Netflix has missed quarterly targets, but it was significant all the same.
Netflix reported an increase in worldwide subscriber numbers of 2.7 million. It had targeted 5.1 million. In the US, its most lucrative market, subscribers actually fell by 126,000, compared with targeted growth of 352,000.
The news was not welcomed by the market. Netflix shares fell by 11pc, knocking $15bn (€13.4bn) off the market capitalisation of the company.
Netflix said the missed targets were about timing and the release of some big new series that are coming out.
That may be right. But it didn't stop the market speculating whether there was a real danger that Netflix's growth trajectory was about to plateau. It may be too early to predict the maturing of the ultimate disrupter in the sector - the disrupter disrupted.
But in simple terms, there are more competitors now. Netflix has chosen not to use advertising, but there has been ongoing speculation that ads are not that far away, with some commentators suggesting it might make an announcement of some kind of a move towards introducing advertising before the end of this year.
Traditional TV companies will be buoyed up by this news, but it hardly means the end of the disruption threat.
In fact, the reality is that traditional TV companies have to become more like streamers to stand a chance.
Regulation is a good example of this. Last week, ITV announced its long-awaited joint venture with BBC to provide BritBox.
Its name sounds like something from inside the mind of Jacob Rees-Mogg, but it is an online streaming service which will incorporate the best of many years of British TV content from both broadcasters. It will cost £5.99 (€6.70) per month and is expected to be available in the UK before the end of this year. It doesn't include Channel 4 or Channel 5, but talks about including them are ongoing, according to ITV.
ITV is putting £65m into the joint venture. The BBC will continue to provide a lot of the programming. The concept has been 12 years in the making.
That is because the original idea was blocked by the Competition Commission in the UK and by Ofcom, the TV regulator.
Until a landmark ruling in recent weeks, the BBC could only make programmes available on its iPlayer for one month. So if you wanted to watch a bit of classic Only Fools and Horses or whatever, you couldn't.
Other TV companies had got together and lobbied hard to prevent the BBC from making its back catalogue available on its website. The irony is that any BBC programme that was licensed to operators like Netflix could be available for years on their platforms.
The regulators, in an attempt to prevent the BBC from enjoying a competitive advantage over rival private-sector terrestrial broadcasters, handed the likes of Netflix a great opportunity.
BritBox represents something of a terrestrial fightback, albeit in the space dominated by Netflix.
Ofcom, as regulator for the sector in the UK, has finally realised the bigger picture and wants to give not just the BBC, but also ITV, a fighting chance in what is the genuine growth segment of the so-called TV market.
ITV has some other irons in the fire. It is looking at a possible deal with Sky and a five-year re-transmission deal with Virgin Media.
It seems the old media companies are finally coming together and launching a credible alternative.
In the meantime, Netflix is under pressure to continue its growth trajectory at a time when the online streaming sector is opening up to more new competitors, and about to fragment a little more.
Amazon, Apple and others are all in the mix, in what has become the audio-visual equivalent to the Gold Rush.
The decision by British regulators to finally cop on and allow some kind of alternative is a positive move. But it has come very late in the game.
Regulation is key in protecting what is different about traditional media, whether it is in TV or newspapers.
One of the first things on foot of the BritBox project will be a reclamation of TV programmes made by the BBC and ITV back from Netflix. Shows like Happy Valley, Broadchurch, The Office, Les Miserables and Victoria will likely go off Netflix.
The US streaming giant will hardly be quaking in its boots at the prospect of losing Benidorm back to its terrestrial TV creators.
It is far too early to read too much into one bad quarter from Netflix, although the actual loss of subscribers in the US is significant.
But expect a big push from the company. The US giant will push hard with new content announcements, new investment in programming, and a massive marketing push, in the wake of a share price hit that reduced its market value by billions.
Netflix's earnings were not hit in the same way as subscriber numbers because it has been ratcheting up subscription charges.
The big strategic decision for Netflix will come around the issue of advertising.
Having decided to build a business model without ads, it will be very reluctant to head down that avenue unless it believes such a new departure can deliver financially into the long term.
The question of what next for the future of TV remains uncertain and unanswered.
Greater competition in streaming should be good for consumers.
But the bigger question is even more uncertain. What next for traditional broadcasters? If Love Island is a big win in the genre of TV broadcasting, things are not looking good.