New targets to double viewing to All 4 and to deliver 30% of total revenues from digital advertising and 10% from non-advertising by 2025
Channel 4 establishes Global Format Fund to invest in UK-produced
formats with global potential
Channel 4’s Chief Executive Alex Mahon has today unveiled a new five-year strategy for the business, Future4 – which will accelerate its pivot to digital and significantly increase both streaming of Channel 4 content and new revenues. This will underpin the organisation’s commercial self-sufficiency and its reach – ensuring Channel 4’s continued ability to deliver distinctive content at scale and meet its unique public service remit in a more competitive digital viewing environment.
The Future4 strategy will drive towards two clear objectives over the next five years: to double the viewing to All 4 and to deliver 30% of total revenues from digital advertising and 10% from non-advertising.
It will also help deliver a new clearly articulated purpose for Channel 4 which has been unveiled to the organisation’s staff, partners and stakeholders today: create change through entertainment. This new purpose is rooted firmly in the corporation’s statutory public service remit and its commercially funded, not-for-profit model and is accompanied by three statements that articulate the organisation’s vision to: represent unheard voices, challenge with purpose, and reinvent entertainment.
This will be delivered across all of the UK, with Channel 4 now operating across five bases in Leeds, Bristol, Glasgow, Manchester and London – and on track to deliver on its commitment to have 300 jobs based in the UK Nations & Regions in 2021, and 50% of original content budget invested outside London by 2023. Channel 4 will move into its new National HQ building in the Majestic in Leeds in 2021.
Future4 was launched by Alex Mahon and the organisation’s Executive team today to staff and its partners in the industry. It has four key pillars:
- Prioritise digital growth over linear ratings
- Put viewers at the heart of decision making
- Diversify new revenue streams to underpin sustainability
- Focus on strategic partnerships to compete more effectively
Alex Mahon, Chief Executive, Channel 4 said: "Since it was founded, Channel 4 has invested over £11bn in original British television and we have always been different from other media companies in the way we play our role in that thriving economy. But, as we emerge from this pandemic, I believe the need has never been greater for a public service broadcaster like ours: one that can represent the unheard in our society, can challenge misinformation, and can create change through entertainment for all UK viewers and for our creative sector.
“Our ongoing focus is to continue to deliver our purpose and remit with meaningful scale and impact and I’m incredibly proud that we have already moved our viewing and our advertising revenues to digital at a faster rate than our competitors. We want to push this even further still, and our new Future4 strategy is about underpinning our commercial sustainability and ensuring that we have a clear plan to transform ourselves into a digital public service media organisation that delivers across the whole of the UK for the future.”
Prioritising digital growth above linear ratings
Channel 4 will pivot its content and commissioning strategy to achieve significant growth in digital viewing on All 4 and on social – with a clear target of doubling viewing to All 4 over the next five years.
The Future4 strategy builds on the strong success that Channel 4 has already had in transforming its viewing and revenues to digital faster than its commercial competitors. All 4 views are up +27% across 2020, with one billion views already achieved across all platforms this year. During the first lockdown period (23 March to 3 July), All 4 views grew by +54%, with rate of growth comparable to SVODs such as Netflix.
This has been driven both by originated content from Channel 4 and E4, such as The Great British Bake Off, Taskmaster, Deadwater Fell, Murder in the Outback, Leaving Neverland, and The End of the F***ing World – as well as an extensive catalogue of All 4 exclusive and archive content such as The West Wing, ER and The Inbetweeners. All 4’s depth of content means it is now the UK’s biggest free streaming service.
Going forwards, all of Channel 4’s commissioning, scheduling and commercial strategy will be optimised towards growing views and revenue on All 4 – with a much greater focus on investing in content that can deliver long-term digital viewing growth.
There will be greater investment in young-skewing formats like Snackmasters or The Dog House; more innovative reality like The Circle; comedy-entertainment like Taskmaster; noisy documentaries like Leaving Neverland; compelling factual series like Prison; more scripted comedy like Derry Girls and Friday Night Dinner; and more young profiling drama like The End of the F***ing World.
Channel 4 will also step up its commitment to original short form content distributed on social media, from its new digital content hub, 4Studio, based in Leeds. Over 2021 there will be social shorts commissioned across most genres in addition to branded entertainment partnerships such as this year’s Mission Accessible travelogue series with Rosie Jones, and all-female spoken word shorts, Unseen Kingdom.
Following the success of E4’s lockdown digital hit, Remote Comedy, there will also be new E4 digital shorts with new talent including Munya Chawawa, in new series What If. Channel 4’s new strand of unscripted social content aimed at teenagers will also launch in 2021.
Announcing the strategic focus on digital today, Director of Programmes Ian Katz also reaffirmed Channel 4’s commitment to delivering to the organisation’s purpose and public service remit. As part of this, he announced a focus on Channel 4 providing more joy and fun to help viewers escape the Covid-19 pandemic as well as a renewed commitment to noisy and challenging programming. Full details of the 2021 content announcements can be found here.
He also outlined how Channel 4 would be more representative of all the UK with a year that includes the Tokyo 2020 Paralympic Games; and the Black Takeover – working alongside the Sir Lenny Henry Centre for Media Diversity to ensure a long-lasting legacy for off-screen diversity in the industry.
Global Format Fund - a new R&D lab to invest in global format hits with British producers
Over the last 38 years, Channel 4 has played a significant role in the growth of the UK’s world-leading television production and creative industries, investing in excess of £11bn in the sector and supporting the creation of global format hits from Supernanny through to Come Dine with Me and Gogglebox.
Today, Channel 4 is announcing a new Global Format Fund which will invest in new British-created and produced content formats that have global potential. The fund will initially be worth £30 million over two years, and through it Channel 4 will partner with a range of producers to create content focussed on delivering both UK audience appeal and international exploitation potential. Taking properties selected for this R&D approach, Channel 4 will guarantee minimum runs and recommissioning triggers up front, as well as levels of marketing support. Channel 4 will also leverage its creative and marketing experience and audience insights to support producers with their international exploitation of the format.
The new fund builds on the success of Channel 4’s Indie Growth Fund and Channel 4 Ventures (formerly the Commercial Growth Fund) which over the last four years have used Channel 4’s resources and expertise to help support growing independent producers and digital businesses, whilst also driving new longer-term revenue streams to support Channel 4’s routine investment in content and delivery of its remit.
The Global Format Fund will focus on genres with the greatest potential for global format success, including Daytime, Factual Entertainment, Features and Entertainment. Commissioning teams in these genres will create clear editorial briefs with a focus on formatted shows which can resonate both with UK audiences and have international appeal.
Within the UK, content created by the Global Format Fund will be subject to the current Terms of Trade. Internationally, all rights will be controlled by the Producer. Reflecting the sharing of risk in launching new formats by drawing on Channel 4’s assets and resources in this new way, Net Receipts from secondary use, format fees and international exploitation, will be shared equally between the Producer and Channel 4.
Putting viewers at the heart of our decision making
To support this pivot to digital, Channel 4 must better understand its audience and their needs in a much more complex and dynamic market and become much more viewer-centric. The business will roll-out a much more sophisticated data-led targeting model to inform its content, marketing and product development strategy.
Channel 4 already has 24 million registered users of All 4 and, with viewers’ consent, can use first-party data to personalise the experience of viewers on the service, from content recommendations to product features. Recently this viewer data has been augmented further with deeper attitudinal research, and through the organisation’s new digital hub 4Studio, will also be adding further insight and understanding of social media habits.
All of this data will be used across the organisation more effectively to place the viewer at the heart of every decision – helping to better inform how Channel 4 commissions, schedules, plans, develops its products, markets and sells. Within commissioning, this will in no way replace the creative development process but will be allied with the expertise of commissioners and their production partners to better inform and aid the development of content. In marketing and product development, this will help to achieve better targeted delivery of content, and over time will inform the brand development of Channel 4’s linear and digital services.
Diversifying new revenue streams to underpin Channel 4’s sustainability
To maintain the resilience of Channel 4’s commercial model, which funds the organisation’s investment in content and the delivery of its purpose and remit, the Future4 strategy will focus on increased innovation through Channel 4’s core commercial products and diversifying revenue beyond advertising. Channel 4 has set a clear target to deliver 30% of total revenues from digital advertising and 10% from non-advertising by 2025.
This will build on the strong track record in digital and data innovation that Channel 4 has already demonstrated in growing its digital revenue base, with digital advertising accounting for 14% of total corporation revenue in 2019 and on-track to grow to 17% in 2020 – ahead of commercial peers in UK and Europe. All digital revenues, including syndication of All 4, are set to grow from 17% of total revenue to 20% in 2020.
Core commercial innovation will also include expansion of Channel 4’s data-matched digital advertising products and the roll-out of addressable advertising on linear services through partnerships including Sky’s AdSmart.
Channel 4 will scale up 4Studio – the new digital content studio based in Leeds – to build and more effectively monetise the organisation’s footprint in social. This will include new and deeper relationships with social partners, building on the success 4Studio has already achieved with its partnership with Snapchat, in which short-form edits of some of Channel 4 and E4’s biggest shows have been distributed to millions of young viewers on Snapchat. 4Studio will also expand its presence in branded social entertainment, developing and distributing content with a range of advertising partners.
Channel 4 will also accelerate the take up of All 4+, the ad-free version of its on-demand service, with new content, features and product enhancements.
Channel 4 will also examine options to increase the scale, investment and impact of its highly successful Indie Growth Fund and Channel 4 Ventures (formerly the Commercial Growth Fund) over the next five years. Since launching in 2014 the Indie Growth Fund has generated commercial returns for Channel 4 by investing in and helping to grow early-stage production companies across the UK – with successful exits including True North, Whisper Films and Barcroft Media.
Channel 4 Ventures, launched in 2015, has invested in high-growth digital consumer businesses and offers media airtime in exchange for equity, with current investments including Meatless Farm, SportPursuit, Drover and TravelLocal. The fund has also recently successfully exited Pinterest and Readly realising a healthy return on investment.