Is TV becoming too fragmented?

Research by IBISWorld has concluded that TV advertising is becoming less enticing due to audience fragmentation brought about by recent technological developments.

The split between customers for pay TV, free TV and digital programming has had a negative effect on the value of advertising, IBISWorld argues.

There has been an overall decrease in value for subscriptions to paid-for services due to the increasing competition between providers of pay TV.

Industry analyst at IBISWorld, Arna Richardson commented: “The fragmentation of audiences between free TV, pay TV and numerous digital channels has made TV advertising less appealing to companies, driving values down.

“In coming years the industry is likely to post modest growth, as revenue from internet-based advertising for TV-on-demand and programmes viewed online are included more completely in the industry’s income.”

The nature of the TV market is set to harm its growth, particularly in the context of the digital switchover, estimated to be completed by October this year at a cost of £630 million.

Revenue is expected to grow an annualised 0.4% in the five years through 2012-13 to £12.9 billion, including a forecast 3% increase in 2012-13.

Richardson added that despite the continuing dominance of providers such as the BBC, ITV, Channel 4 and Channel 5, there has been a host of new companies looking to capitalise on the fragmentation of TV – which has resulted in the creation of new viewing technologies.