By a happy timing, no sooner had Netflix warmed Wall Street’s heart with its latest soaraway subscriber numbers than the BBC produced its 2016/17 Annual Report, which includes a good deal of insight into the digital ambitions for the UK national broadcaster, not the least of which is to “reinvent public service broadcasting for a new generation”, according to BBC Director General Tony Hall, who declares:
We have to ride two horses in the years ahead: doing brilliant things on our existing channels and services, but also innovating in the digital space.
Hall’s public service broadcasting re-invention is fuelled in part by research from media regulator Ofcom which indicates that younger people do still value the concept even in an age where conventional wisdom has them glued to their tablets watching - and paying for - Netflix. The tricky bit though is, says Hall, getting to those young people:
In fact, it is one of the single biggest strategic issues we now face. Firstly, because there is so much competition for their time. Adults spend 8% of their media time on social media and messaging. For 16 to 24s, it is 25%. Across the whole of the television market, time spent with young audiences has fallen by 20% to 30%. It is the same story with radio. Increasingly, younger audiences and older audiences are consuming media in different ways. This is why we have to respond.
This is where the N-word comes into play with the rise of global competition in domestic markets, a priority focus articulated by Netflix CEO Reed Hastings. Hall states:
The media landscape around us has changed beyond recognition. It has become hugely more global and competitive. We are now in an environment where others are willing to invest huge amounts of money in an attempt to capture market share, and where technology companies are increasingly moving into areas that broadcasters have traditionally thought of as their own…We now also need to look again to the online space – where competition is high, new audiences are most present, and where we can serve them in brilliant new ways.
Key to this is iPlayer, the BBC’s Video-On-Demand service that has been one of the non-negotiable technology success stories from the BBC. (There are plenty of failures as well, most recently the BBC Store, but more on that later…) iPlayer is the number one VoD service in the UK - 2016 was its biggest year yet with 246 million monthly requests on average - but it’s time for rapid expansion, says Hall:
Now we need it to make the leap from a catch-up service to a must-visit destination in its own right. Our goal, even in the face of rapid growth by our competitors, is for iPlayer to be the number one online television service in the UK. That will mean doubling our reach, and quadrupling the time each person spends on it every week, and we want do it by 2020.
One of the drivers to achieve this ambition will be increasing levels of personalisation of digital services, which in turn means a bigger focus on understanding who the BBC ‘consumer’ is. For those outside of the UK, this shift in emphasis is a significant one from the BBC’s original mission statement of ‘inform, educate and entertain’. That’s still the basic idea today, but for much of its lifetime the BBC has taken the stance of knowing what’s best for its viewers, hence the Corporation gaining the nickname of Auntie.
But now Auntie needs to listen to her nieces and nephews about what they want rather than telling them what’s good for them. One way of doing that is by getting users of BBC digital service to sign-in for access. It’s not pay-to-view or a step towards a paywall (yet) but, says Hall, a way to engage with user needs:
Data is creating a flight to quality. It means audiences can find the best of public service broadcasting, but only if they sign in. We are continuing to see growth in the signed-in audience and had close to 4 million active signed-in users in May. I want to make that at least 20 million, and I want us to get there as quickly as possible. I believe that, perhaps more than anything else, this is what our future success will depend on. By finding out more about our audiences and what they like, we can make better content, make it more relevant, and bring it to them more effectively. The closer and more personal our relationship with our audiences, the more they will choose the BBC.
Away from the BBC’s own digital properties, there has been some successful expansion on social platforms. The number of users globally engaging with BBC content on Facebook was 6.9 million per week in March 2017, up from 266,000 in its launch month in February 2016. On YouTube, there were 10.7 million views of BBC Three content in March 2017 (2.4 million in the UK) compared with 1.3 million at launch (857,000 in the UK).
Meanwhile 2016/17 saw BBC Online used by 51.5% of UK adults, level with 51.4% in 2015/16. Mobile usage is the biggest screen in terms of traffic to BBC Online, averaging 43% throughout the year and peaking at 47% during the week of the Brexit vote last June.
Published alongside the main BBC Annual Report is the equivalent for BBC Worldwide, the commercial arm of the Corporation which handles the exploitation of BBC brands around the world to generate profits that can be fed back into the main organisation and fund programming and content. To put into context, last year BBC Worldwide, with its partners, provided between one-half and fourth-fifths of funding for Planet Earth II, Doctor Who and Top Gear.
But Worldwide is also exposed to the Netflix disruption threat, as Tim Davie, Chief Executive, BBC Worldwide and Director, Global, notes:
On the face of it, our industry is stable and modestly growing. Television viewing (which does not include Video on Demand (VOD)) around the world remains fairly steady, averaging three hours a day in 2016, a small decrease on three hours 10 minutes in 20101. Meanwhile, estimates of global expenditure on TV and video over the next ve years predict a Compound. annual growth rate (CAGR) of 2.5%, reaching US$318bn in 2020, with a TV subscription CAGR of 2.8% just above trend.
The rise of VOD services continues at pace, with Netflix and Amazon Prime now jointly boasting 168m subscribers, a year-on-year increase of 25.7%3. However, the world of increased choice brings challenges alongside opportunities, with increased competitiveness and margin pressure present in the majority of our established business areas.
Back in 2013, BBC Worldwide articulated a strategic direction that included a commitment to “enter the world of digital direct-to-consumer services”. It’s done that successfully on some fronts, less so on others. For example, a recent partnership with commercial rival ITV to set up BritBox, an on demand offering centered around UK television for US audiences. This offers next day access to UK soap operas such as EastEnders and Emmerdale, as well archive content, including the entire Doctor Who back-catalogue.
But another archive endeavor hasn’t worked out as well. As noted earlier this year, the BBC has announced that it will be closing its UK-based BBC Store in November. There’s clearly going to be a post mortem into this that will appear in next year’s BBC Worldwide report - the closure decision was taken just after the time period covered by this year’s publication. For now, the 2016/17 report simple states:
Shortly after year-end we took the decision to close UK DTO service BBC Store. Levels of demand were not strong enough to underpin a sustainable business over the long term. Our content nonetheless remains widely available and very popular on DVD and digital download and across a range of other platforms in the UK.
It’s not hard to read between the lines here. BBC Store was bulit around an iTunes download model. That lost out to the Netflix streaming model. And that in turn is going to do nothing to dissuade the BBC that it doesn’t need to remain hugely paranoid about the threat from US digital disruptors.
Elsewhere I do remain wary of the ‘pursuit of the young’ mantra that continues to be articulated by BBC management. Of course you need to grow and audience of tomorrow, but I do find it rather telling that there’s very little detail about metrics for BBC 3, the linear channel that was moved from TV to a online-only platform because that’s where ‘da yoof’ is, innit? Except when they’re actually watching Netflix in their bedrooms…