Changing the channel – a case for commercialising elements of the BBC

Changing the channel – a case for commercialising elements of the BBC - bbcThe BBC has established a global reach with roughly half a billion people across the world watching and listening to its shows each week. Yet in UK, the corporation has attracted criticism from media rivals and pressure from government to reduce costs and submit to even more oversight.

Although nominally a not-for-profit organisation, 73% of the BBC’s £5bn in annual revenues stem from the mandatory licence fee paid by British tax payers and herein lies the main bone of contention.  Critics of the corporation make the point: “Why should the tax payer subsidise programing through the license fee when the commercial sector is perfectly capable of providing to the public just as well – if not better?” Another refrain is that the scale and reach of the BBC on every single platform completely distorts the market in the UK, making the entry of new and innovative service providers so much harder. A further issue is accountability with the notion that as a public funded entity, viewers should have more say in programming output – although how this would be achieved in practice is tricky to envision.

Such sentiments have dogged the Corporation since the 1960s alongside political criticisms that have in certain quarters suggested the BBC is too liberal leaning; a strong focus for the current conservative government.

The situation is now at a critical juncture. The renewal of the BBC charter of operation is now under government review after the BBC effectively cut its funding by £750 million by agreeing to subsidise licence fee for over 75s.  The pressure has been increased further by a planned government review that will examine the purpose of the BBC, and how it should be funded, governed and regulated. Ahead of this process, a new Government Green paper has suggested the BBC needs to be more focused with the inference that funding through the licence fee could be cut while a potential privatisation of its Worldwide division should also be considered.

Yet unlike its European rivals, the BBC shows and formats are very popular with global audiences. Shows such as Top Gear, Doctor Who, Sherlock and an extensive catalogue of factual content are watched by hundreds of millions and generate around £1.3bn annually. The BBC has also experimented with an international edition of its iPlayer VOD service, which launched in 2012 in 11 countries with a subscription of roughly £4 a month. Although the subscriber figures have not been released, the recent Global Web Index survey found that a total of 63.4m viewers are using the BBC streaming service via VPN to avoid paying subscriptions.

With the charter review and government pressure, the BBC position looks shaky – yet it may well be an opportunity for a dramatic change of direction that will help it meet its public broadcaster remit while blunting critic of the licence fee. Considering that  iPlayer may well have more viewers than Netflix, there is a strong case for the BBC creating a proper commercial VOD service. With exemptions for licence fee payers, the huge back catalogue of programming along with successful TV shows, licensed and co-production movies could provide a viable revenue stream.

Subscriber management technologies are mature in todays’ market and would be able to cope with this type of hybrid service for iPlayer, while security and conditional access (CA) systems are easily able to stop unauthorised viewers.  Potentially, a commercial iPlayer could serve advertising to non-licence fee payers and generate more revenue for the Corporation.

This is not just hypothesis; this type of public service TV and commercial hybrid model is already delivering results. NHK (Nippon Hōsō Kyōkai) Japan Broadcasting Corporation broadcasts  its free-to-air NHK News and information programmes, along with a wide range of Japanese TV programmes, through its JSTV subscription channels on DSAT in Europe, the Middle East, Russia and North Africa.

The NHK News and information programmes are free-to-air; however for viewing other JSTV content, a subscription is required. In 2012, Paywizard worked with NHK Cosmomedia Europe to extend the reach of its channels by launching an OTT channel, JSTV-i, to broadcast content online (via set top box) and iPad.  The project delivered a secure online payment facility with multiplatform, multi-device and multi-currency capabilities as well a great deal of insight into NHK’s international audience to help it create effective marketing strategies based on real-time actionable data, leading to increased ARPU.

Although NHK differs in many ways from the BBC, with its inclusion of advertising, the notion of a more monetised BBC is clearly a preferable option. The CA technology needed to allow license paying subscribers to opt-in or out of BBC content is already deployed in the home. Based on 2013 data from Ofcom, around 60% of the UK’s 25 million households already take pay-TV services from the likes of Sky and Virgin and these set-top-boxes could easily facilitate deployment of a BBC subscription based service.

For all of its detractors, the global affection for its brands and trust in its news output makes the corporation a tricky beast to tame. However, if it hopes to reach its centenary in 2022 with a celebration, there needs to be a change. No one would  argue that it’s better to change of your own free will then to have change thrust upon you…

Jonathan Guthrie