More people are watching shows and films through Netflix, Amazon Prime and other streaming services than through traditional satellite and cable TV, according to new figures from Ofcom.
The UK media regulator said online streaming was officially more popular than pay-TV for the first time, with the number of subscribers for websites hitting 15.4 million in the first quarter of 2018.
This comes despite significant investment and effort from traditional broadcasters to keep ahead of their online rivals.
In its first annual Media Nations report, Ofcom credited Netflix and Amazon's focus on creating original content for its subscribers as a key driver of growth.
"More than a third of Netflix (38 per cent) subscribers cite ‘to watch original series made by the provider’ as a reason for signing up (up from 30 per cent in Q1 2017)," the report stated.
Sharon White, Ofcom’s chief executive, said: “Today’s research finds that what we watch and how we watch it are changing rapidly, which has profound implications for UK television. We have seen a decline in revenues for pay TV, a fall in spending on new programmes by our public service broadcasters, and the growth of global video streaming giants. These challenges cannot be underestimated."
She added: “But UK broadcasters have a history of adapting to change. By making the best British programmes and working together to reach people who are turning away from TV, our broadcasters can compete in the digital age.”
The latest figures from Ofcom do not take into account people watching shows and films through illegal streaming platforms, which has become a constantly evolving battle for copyright holders, broadcasters and regulators.
"Today's figures from Ofcom are a landmark on the road we have been walking down for a long time," said Chris Anderson, head of film and TV at digital piracy authority MUSO.
"In reality, with piracy figures considered, streaming probably overtook traditional TV long ago – but piracy audiences are overlooked by TV broadcasters, streaming services, and regulators to their detriment."
Figures from MUSO show that global piracy has increased year-on-year, with more than 4 billion visits to film and TV piracy sites in the UK in 2017.
While it may seem counter intuitive, Mr Anderson suggests the traditional broadcasting industry should look to viewers lost to illegal piracy sites in order to better compete against the legitimate streaming services like Amazon and Netflix.
"If UK broadcasters are serious about their mission to adapt their revenue streams to compete in the digital age, they need to not only consider the audiences lost to legitimate streaming services but also illegitimate ones," he said.
"Piracy audiences are one of the great untapped pools of wealth - they have extremely high intent to access content but are often simply unable to. Finding ways to access this audience could be the secret bringing higher profits back to broadcasting."
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