Section 3 of the Strategy outlines the current broadcasting landscape and provides information on its evolution. Key influencing factors are detailed including legislative provisions, technological developments and consumer behaviour trends. Both the current and future trends for television and radio sectors identified in the research undertaken in late 2017 are summarised. There is no consultation question arising in respect of this section.
There are several influencing factors fundamental to the preparation of the Broadcasting Services Strategy. There is the existing broadcasting environment, including the current mix of services already established and available to Irish audiences, the legislation which underpins the establishment and licensing of broadcasting services in the State, and a range of economic, regulatory and technological factors impacting upon the provision of services. Each of these is discussed in more detail below, informed by the BAI’s research findings.
The Broadcasting Act 2009 envisages that three principal strands of broadcasting will shape the Irish broadcasting environment – public, commercial and community. From an audience perspective there may be similarities in some of the content delivered by the various broadcasters within these strands, however, each has characteristics or features unique to that strand such as: the way in which they are owned and controlled; the means by which, and the persons to whom, they are accountable; the mechanisms by which they are funded; and, of course, the nature of the content provided. The 2009 Act prescribes specific objects for each of the public service broadcasters and sets out the defining characteristics of community broadcasters.
The role of the BAI is to facilitate and support the continued provision of a range of television and radio services within the three principal strands of broadcasting in order to realise the vision of the statute and to ensure vitality in the mix and range of services available to Irish audiences. This is achieved across the full range of the BAI’s statutory functions including, in particular, through the licensing of television and radio services.
The 2009 Act is prescriptive in its requirement of the BAI to develop and implement a licensing plan and in respect of the types of broadcasting contracts into which the Authority may enter as well as the mechanisms for the award of such contracts. The statute also shapes and influences the broadcasting environment through a range of provisions such as media concentration requirements, news and current affairs provision by broadcasting services, etc. Further provisions of the 2009 Act impose a range of advertising and programming regulations, as well as a range of contractual conditions on broadcasters.
The Irish broadcast media market is mature and competitive. It comprises multiple business models and numerous operators providing a range of both domestic and international audio and video content. It is characterised by evolving consumer behaviour around content consumption, where and when desired, increasing fixed line and mobile connectivity, and growing device take- up, including smartphones, tablets and connected TVs.
It has experienced significant structural and behavioural changes over the last ten years in common with international trends, leading to greater complexity and competition for both the radio and television sectors. These drivers of change can be categorised under four broad headings; technology and connectivity; ownership of connected devices; changes to consumer behaviour; and, changes to corporate strategy.
- Technology and Connectivity
The high-level of broadband penetration and increasing download speeds year-on-year are allowing individuals to access internet delivered services which are viable complements to, or substitutes for, traditional broadcast media.
- Ownership of Connected Devices
The ownership of traditional radio and TV sets coupled with the ownership of internet connected devices such as smartphones, tablets and smart TVs, is enabling the consumer to have greater control over their engagement with broadcast media (e.g. personal video recorders are now in 59% of Irish homes, allowing viewers to record and store content, and on-demand services are now available to anyone with a broadband connection).
- Changes in Consumer Behaviour
Consumers are making greater use of on-demand services and viewing/listening outside the traditional broadcast window, on multiple devices, in and out of the home.
- Changes to Corporate Strategy
Content is now packaged in several ways including via multiple outlets across free and pay, subscription and discrete payments (e.g. TV3 and RTÉ on-demand services, Netflix and Amazon now provide over-the-top on-demand access to deep libraries of high quality content).
Current listenership and viewership performance figures reveal that Ireland remains a country strongly attached to broadcast radio and TV: 82% of adults 15+ age in Ireland listen to radio stations every day (JNLR Report, April 2017), while 67.5% of all individuals watch live TV channels everyday (TAM Ireland figures for 2016). The Kantar audience survey revealed an increasingly complex picture of content consumption within a landscape that is still primarily led by broadcast media. There is overall satisfaction with the nature and range of broadcast content provision and the output and performance of Irish broadcasters.
Television services in Ireland include public service, commercial and community stations, provided principally on a national level across a range of platforms, including terrestrial, satellite, cable and IPTV. Public broadcasting television channels are provided by RTÉ and TG4. RTÉ’s most popular services include RTÉ 1 and RTÉ 2. TG4 provides a valuable Irish language service to the island of Ireland. TV3 is the only privately-owned terrestrial alternative to the public service television broadcasters and operates four services – TV3, TV3+1, be3 and 3e. RTÉ1, RTÉ2 and TV3 achieve significant viewership amongst Irish audiences.
Irish households are also able to receive the Houses of Oireachtas TV, and a combination of UK and international channels (including BBC, Channel 4 and Sky One) depending on which TV platform/service the household uses.
Since the late 1990s, a small number of additional commercial and community channels have been introduced on cable and satellite systems, providing additional choice to Irish audiences accessing those systems, e.g. Eir Sport. There are two community television services, in Dublin and Cork.
Current Dynamics of the TV Landscape
The television sector has experienced major changes over the past five years, with viewers benefiting from greater choice of content, prices and providers, as well as an increasing choice over when and where they can watch video content. This mix of channels and services provides Irish audiences with a wide choice of viewing options (broadcast, catch-up, on-demand) on multiple devices (at home and on the move). This presents challenges for the sustainability of Irish content funding, as international channels can generate income from the Irish market but invest very little in Irish content. This increase in choice also challenges the maintenance of current levels of viewership to Irish channels.
The new players in the Irish TV marketplace offering new forms of online distribution are providing competition for the traditional pay TV providers and free-to-air platforms the most common form of which is subscription video-on-demand (SVOD) services. The largest such provider is Netflix which can now be found in nearly a third of Irish households. Recent entrants to the market are Amazon Instant Video and Now TV. Broadcasters have grown their user bases for video-on- demand services such as 3player and RTÉ Player.
A significant trend in TV content viewing is the move among younger listeners to alternative devices and formats. However, broadcast television viewed on the TV set dominates total video viewing. There is a decreasing trend in live viewing, with increasing trends in recorded content and on-demand viewing.
Future Dynamics of the TV Landscape
It is predicted that over the coming years the penetration of connectivity and connected devices will increase, in turn continuing to drive consumption of video content on a non-linear basis. Live TV continues to decline in share but at a slower pace, influenced by factors such as late adopting homes and the importance of live sport, news and entertainment. However, live TV will remain the major component of all TV viewing in 2022. Audiences will make greater use of non-TV devices to view TV content. There will be relative stability in the platform market. The key change between now and 2022 will be the continuation of the shift to cheaper pay TV bundles. The level of non-TV homes will increase slowly and 47% of households will have subscription video-on-demand.
The sustainability of the Irish television sector and the maintenance of viewership, balancing audience needs and ensuring culturally relevant content, will be significant priorities.
At national level, the Irish radio sector now consists principally of seven terrestrial radio services, four provided by RTÉ, and three of which are licensed by the BAI. They provide a mix of speech and music-driven services, as well as Irish language and classical music services. In addition, RTÉ provides a range of specialist services on digital platforms.
Regional radio services primarily target youth audiences, while, at local level, the radio sector consists of a mix of music-led and more broad-based, music and speech services. Community radio services also feature across the country, targeting primarily small geographical communities and communities of interest.
RTÉ’s radio services are well established and cater for audiences at a national level with a range of news and current affairs, music and Irish language services, principally serving audiences aged 25 and over.
Regional stations were developed in the South East, South West, North West and Midlands/North East areas and these provide services to younger audiences which are also served by local services in the urban areas of Dublin and Cork. Over the mid-to-late 2000s, a number of niche music services commenced broadcasting, mainly based in Dublin, but with one broadcasting on a multi-city basis. A radio service provided on a quasi-national basis caters for Christian interests.
Community radio is prominent in Ireland and a strong network of stations has developed since the first services were licensed on a pilot basis in 1995. Regulatory policy and more recent statutory developments in this area are regarded as providing a strong underpinning for community radio in comparison with other European jurisdictions. The most important dimension of community radio services is the involvement of local communities in all aspects of the service.
Up to thirty temporary or special event sound broadcasting contracts are awarded each year by the BAI serving, for example, college festivals, training for students, annual events and pilot community services.
Finally, institutional sound broadcasting services remain a part of the mix of services providing a valuable service to their listeners, particularly those in hospitals.
Current Dynamics of the Radio Landscape
The radio market is mature, with a dominance of analogue FM radio services. It is now facing similar challenges to those of the television sector; a decline in younger listeners and connectivity
– streaming, on-demand and downloads. It now operates as part of a wider audio market. There is also a weakness in the value advertisers place on the radio brand.
Radio listening in Ireland continues to be extremely strong (82% reach for Adults 15+ in 2016, JNLR) and is relatively very strong in a European context. In addition to the well-performing portfolio of public service stations, independent commercial operators enjoy widespread popularity at national, regional, and local levels. While overall listening and reach have been relatively stable since 2010, statistics for the whole population obscure a significant drop in radio consumption by younger listeners. Traditional radio sets (standalone or in-car) are still the dominant devices for listening to radio among all Irish listeners including the younger audience and this reflects the high level of ownership of such devices, the times of the day with the highest listenership and listener habits.
Future Dynamics of the Radio Landscape
Over the next five years, increased connectivity will lead the radio market to become increasingly converged and crowded as more listeners gain access to new forms of audio entertainment. Nevertheless, it is forecast that live radio will remain prominent, with a slight decline in radio listening by 2022 but reach will remain stable. Increased connectivity and device penetration will drive growth in alternative audio formats such as owned music, podcasts/radio catch-up and streaming, with the latter predicted to be the likely source of most growth. The growth of podcasts should be strong in Ireland, particularly given the popularity of talk radio. Irish audiences think highly of Irish radio as evidenced by the Kantar audience survey. The development in podcasts will depend on the major broadcasters who have the capacity to produce and market podcast content, building cross-format brands.
Regulatory Policy and Practice
The 2009 Act prescribes to a great extent the regulatory role of the BAI, including a number of regulatory measures relevant to the Broadcasting Services Strategy. These include, for example: limits imposed on the ownership and control of broadcasting services; the application of the derogation in respect of the statutory 20% news and current affairs requirement on commercial and community radio services; the amount of advertising time available to certain broadcasters; the restrictions imposed under programming and advertising codes; the requirements imposed on applicants for licences, both in the application process and during contract negotiations and the manner in which services are subsequently regulated from a compliance perspective.
The BAI is committed to regulatory policies and practices that are fair and proportionate, that balance the needs of the sector with the needs of the Irish audiences. The BAI will explore and support regulatory developments that could potentially enhance the sustainability, development and creativity of the sector. The BAI is committed to continually reviewing and improving its administrative capabilities and to seeking greater effectiveness and efficiencies in its regulatory practices. This will include faster response times on regulatory engagement and more regular communications with stakeholders.
The BAI commits to reviewing the regulatory environment governing commercial and community radio on the publication of this Strategy.
Sources of Funds
Irish broadcasters are funded in a mix of ways. Public service broadcasters receive public funding to varying degrees and are also commercially active, primarily through on-air advertising activities. RTÉ is required under the 2009 Act to exploit commercial opportunities in the pursuit of its statutory objects, although public funding generally tends to account for between 45% and 55% of its total funding.
A mix of public funding (including a portion of the television licence fee) is the principal means of funding of the Irish language television broadcaster, TG4.
The main source of funding for commercial television and radio broadcasters is advertising revenue, while the community broadcasting sector depends mainly on government grants and volunteer involvement.
A portion of the television licence fee (currently 7%) is made available to a broadcast fund, operated by the BAI and accessible to all broadcasters targeting Irish audiences. The fund is disbursed through a scheme or schemes, including a programming scheme for television and radio programme initiatives and an archiving scheme for the archiving of programme material produced for broadcast on television and radio.
Current and Predicted Economic Dynamics
As in most mature media markets, broadcasting advertising income has been under pressure in Ireland as a result of structural and cyclical challenges. However, the impact of the significant falls in revenue due to the recession that started in 2008, coupled with Ireland’s specific characteristics (a small nation sharing a linguistically porous border with much larger markets), has meant that the challenges in the advertising sector specifically, even as the underlying economy improved from 2014, have been peculiarly acute. Since 2007, when TV advertising reached a high of €311m and radio advertising hit €140m, the trend has been downward for both TV and radio advertising over the last ten years. Revenues achieved for 2016 were €240m and
€127m for TV and radio, respectively. The market has been further impacted by Brexit and political uncertainty has compounded pressure on advertising revenues for the broadcasting sector. Research forecasts advertising revenues for both radio and TV will be flat at best over the next five years, following a downturn in 2017 continuing in 2018.
Despite the structural changes including the migration to digital platforms and content, both the radio and television sectors perform strongly in listenership and viewership terms. However, the radio sector has not succeeded in achieving a premium brand advertising rate despite its significant listenership. Also, the advertising revenues for radio and television are below pre- recessionary figures. The growth in the preference of advertisers to use digital media is increasing and will further pressurise traditional media revenues. The sector will need to adopt new business models if it is to continue to develop and attract viewers and listeners, particularly younger audiences.
Like other broadcasters in the Irish radio sector, community radio broadcasters face challenges on the economic front, particularly in view of the significant reductions in the level of public funding available to support such services. The representative community radio body, CRAOL, has been highlighting the significant financial challenges facing the community stations. The challenge not only impacts on the operational aspects of the services, but the sustainability and subsequent viability. Accordingly, the challenges are both operational and strategic. The level and availability of grants and other public funding is therefore impacting on the development of existing services, as well as any potential additional community broadcasting services.
The BAI’s role includes the management and planning of spectrum for suitable frequency bands for analogue radio and to plan for the development of Digital Terrestrial Television (DTT) and digital radio platforms. Regarding radio, spectrum continues to be available in most parts of the country to support the development of further analogue FM services. However, spectrum is currently limited regarding such radio services broadcasting to large geographically-spread audiences.
The development of DTT in Ireland has to-date been prevented by the level of costs to establish, and the costs of access to, such platforms. The cost barriers to entry are continually monitored by the BAI to ensure that any opportunity to progress DTT is identified.
The BAI will explore the potential for digital radio with the broadcasting sector over the next few years, cognisant of the impact the evolution of technologies, and the associated increase in devices, is having on listeners’ behaviours.
In common with all territories, the broadcast landscape in Ireland is subject to a set of structural challenges that have led to increasing complexity and competition in the provision of video and audio services. As stated previously, these relate to consumer behaviour, technology and business models. Broadcast viewers are increasingly able to access content from new providers across a range of networks and connected devices. This extends choice in Irish households but adds a degree of complexity to the landscape, not least by aiding the entry of international players to the market.
Traditional providers of media need to continue to evolve their business models. TV broadcasters have launched HD services and broadcast Video-on-Demand (e.g. TV3 Player, RTÉ player) and are experimenting with new forms of dynamic advertising, but there will be more pressures to come.
The Platform Market
The TV platform market in Ireland is competitive. It is dominated by the pay TV platform (65% in 2017) with Sky and Virgin being the two largest platforms, with free-to-air satellite and DTT (via Saorview and Freeview) offering free alternatives with fewer channels and less functionality. Internet Protocol TV (IPTV) is also emerging as a competitive alternative mode of TV transmission via eir TV and Vodafone. Recent noted trends are the increase in popularity of free TV options at the expense of pay TV and the ‘skinny bundle’ options from IPTV providers at the expense of the traditional ‘big bundle’ pay TV subscriptions.
Pay TV Dynamics
While there is a recent notable growth in household take-up of free TV, the pay TV market is currently protected to a large extent from a significant switch to free-to-air options by a number of factors including the demand for sport, film and entertainment premium content that is only available behind a pay wall and the convenience and ease of use, combined with technological superiority in the form of personal video recorders and video-on-demand access as standard.
Communications services bundling
The convergence of media is evident in the bundling of TV content with broadband, fixed and mobile telephony offerings by the main providers Virgin Media, Sky, eir and Vodafone. The trend is a shift in focus from TV to connectivity (fixed and mobile broadband).
Radio consumption – devices and networks
The majority of radio listening in Ireland continues to take place on traditional sets, both standalone and in the car. In 2016, 92% of households had an FM/AM radio and 90% had an in- car radio, comparing to a DAB radio set penetration of only 20% (JNLR Media and platform report 2016, February 2017). Despite the recent growth in DAB take-up among the population from 10% in 2012 (JNLR Media and platform report 2016, February 2017), it still only accounts for a small proportion of overall listening, partly because 55+ listeners, who are proportionately heavier listeners of radio, are less likely to own DAB sets. Mobile devices (e.g. smartphones, MP3 players) and computers are popular among younger listeners reflecting their growing preference to consume audio on mobile devices. However, despite the relatively widespread ownership of smartphones, overall radio listening on these devices is constrained by mobile data allowances and cost, low uptake of Irish online/app based radio, and pre-existing user habits. That is, most listeners are accustomed to listening through traditional sets, and they are more likely to listen to the radio at times of day when they have access to traditional/car radios.
Despite the significant digital disruption and changes in consumer behaviours, particularly in the younger demographics, the traditional radio and TV broadcasting services will continue to be dominant in the Irish marketplace over the coming years. The sector has proved to be very resilient in Ireland but now needs to evolve to find new ways to prosper in the changing media landscape.