The Motley Fool

Can BritBox and Love Island really help bolster ITV shares?

If something you do works, do more of it. If something somebody else does works, copy it. This mantra may sound harsh or sceptical at first, but in essence it has been the backbone of almost all successful artists, composers, sportspeople and businesses throughout history, and now it seems to be a philosophy that ITV  (LSE: ITV) is taking to heart.

Love Island

The hugely successful reality TV show has quickly become a flagship programme for ITV, and despite seeing some controversy the past 12 months after two of its previous contestants died, has continued to draw in viewers and help the company’s financial situation.

In its latest report this week, it said advertising revenues fell by only 5% in the first half of the year (compared to its previous expectation of 6%) thanks in large part to Love Island’s success. The company also said that it has made £8m more than last year from the show’s merchandise and affiliate brands like clothing and make-up.

Never afraid to take advantage of successful progammes, ITV announced it would now be making a winter edition of the show. Though some could argue this may be too much of a good thing, I suspect that the appetite of the British public for Love Island will make the show a nice boost to the company’s advertising revenue.

Copying Netflix

The other key area that ITV is attempting to make headway with is its BritBox subscription on-demand service. It is a joint venture with the BBC that, despite the comparisons to Netflix and Amazon Prime, at this stage seems to be limited to the back catalogue and future shows of the two British networks themselves.

This attempt to move into the streaming arena is seen by many – myself included – as far too little, far too late. ITV is simply creating a service that will offer fewer shows than competitors, many years after the major services have established their brand and market share.

ITV CEO Carolyn McCall said “what is on Netflix will not be on BritBox… they will be unique, they will be distinctive”, but it seems to me this is perhaps missing the point – Netflix is successful. Put simply, the Netflix and Amazon Prime model works.

Bringing together TV shows and films from around the world, as well as investing heavily in their own productions, is the nature of the new technology ITV is trying to emulate. BritBox, however, seems to be a subscription-based version of BBC iPlayer.

As is often the case with the old guard in any industry, they just don’t get it. It seems to me the audience who the BritBox service will appeal to most, are those that are generally happy to watch the shows as they normally do on TV (or at least on iPlayer).

Meanwhile, the audience the technology appeals to most — a younger generation that has known nothing different than being able to watch what they want, when they want — will be expecting a far wider service than a limited set of British shows.

I suspect that in the long run, a second season of Love Island each year will have a better impact on ITV’s bottom line than BritBox will.

Who doesn’t want to achieve financial independence?

To never need to work again… Even if you’re like me, and you love what you do, financial independence is a goal most people would love to achieve. FREEDOM to work on whatever projects you like — or not to work at all! Download your free copy of “The Foolish Guide To Financial Independence And Retiring Early” to discover how you and your family could achieve greater financial security and a better quality of life. Click here to start now.

Karl has no positions in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.