By Paul Sandle
LONDON (Reuters) - Britain's ITV (LON:ITV) is combining its subscription and ad-funded streaming services in ITVX, a new digital platform that will have 15,000 hours of content at launch and a 160 million-pound ($214 million) dedicated budget for shows.
ITVX, which will replace ITV Hub, ITV Hub+ and BritBox UK when it launches in the fourth quarter, aims to double ITV's digital revenue to at least 750 million pounds by 2026, the broadcaster said on Thursday.
However, ITV's shares slumped around 20%, despite the company reporting a record year for ad revenue in 2021, as investors baulked at plans to increase investment in content.
"Creating hit after hit comes with enormous financial implications," said Hargreaves Lansdown (LON:HRGV) equity analyst Sophie Lund-Yates. "Rivals like Netflix (NASDAQ:NFLX) can attest to the drains of having a content cash-pit."
ITV said its total content investment would be around 1.23 billion pounds this year, increasing to around 1.35 billion in 2023, with the latter figure about 200 million pounds more than analysts expected.
Chief Executive Carolyn McCall said ITVX would be Britain's first fully integrated advertising and subscriber funded streaming platform.
"(It will) enable ITV to double streaming viewing, double monthly active users, double subscribers and deliver valuable addressable advertising inventory at scale," she told reporters.
ITV, home to "Coronation Street" on its main channel, has struggled to create a enduring streaming brand, with its services previously called "ITV Catch Up," "ITV Player" and then "ITV Hub" and "ITV Hub+", as well as "BritBox" with the BBC.
The company said that while Hub was a catch up service that had around 4,000 hours of content, ITVX would be a destination for viewers with 15,000 hours of content, including U.S. shows and original programmes.
Anyone would be able to watch ITVX for free with advertising, McCall said, and they could upgrade with a subscription for ad-free viewing and additional content, such as that previously offered by BritBox.
ITV said the BBC had ceased to be a shareholder in BritBox UK to ease its integration into ITVX, but that the company had agreed a new long-term content supply deal with the BBC.
McCool also said that, in light of Russia's invasion of Ukraine, ITV had stopped new sales of programmes and formats to Russian clients.
It had also asked Russian broadcasters TNT and Channel One to stop airing ITV shows "I'm A Celebrity....Get Me Out of Here" and "The Voice Kids," both of which are currently on air.
ITV, which reported a 24% rise in external revenue and a 40% increase in adjusted earnings per share, said ad demand remained strong, with the first three months of 2022 expected to be up around 16% and April expected to be up around 10%.
($1 = 0.7479 pounds)