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20 January 2022

BBC must preserve legacy by embracing SVoD, ads, licensing – on global stage

We could sit here all day crying about the decaying face of the BBC as we know it, following the UK government’s decision to abolish TV license fees entirely by 2027 – shutting off the BBC’s primary income – which has sent shockwaves through the UK media landscape this week.

Instead, Faultline decided to take a look at what the BBC might look like in the future, following five years of pandemonium as the Beeb scrambles to seek alternative revenue streams – in a shake-up that will see services and staffing slashed beyond recognition.

Some see the BBC as a national treasure, others consider it a biased burden on society.

Whether you choose to sit on the fence or pick a side, defunding the BBC is ultimately bad news for content – for which the BBC is admired and envied the world over. As such, the most obvious route for the BBC to pursue is to bucket its vast on-demand content catalog into a subscription service comprised of multiple content packages, while seeking ad-supported funding for linear content.

Its linear channels will likely be reduced to just two eventually (BBC One and BBC Two), condensing the best of news, sports, soaps, and gameshows, supported by ads, while drama series and documentaries could be offered under an affordable SVoD subscription, while kids content, films, comedies etc. could be bolted on as extra paid packages.

This is one long-term view, while the near-term will see a gradual reduction in expensive content – hitting high-end dramas, nature documentaries, and sports hardest of all. Once these three supporting pillars of the BBC begin to crumble, as prized content is switched out for cheap repeats, a domino effect will be triggered as viewers see less value in BBC content and refuse to renew license fees. How soon that happens before the 2027 cutoff point will prove crucial, which is why the BBC needs to act sooner rather than later – somehow transforming the already celebrated iPlayer platform into a global streaming powerhouse.

While the BBC is revered the world over as both a content producer and a video technology pioneer, the organizational structure of the BBC as a business has come under increasing scrutiny and scandal – stretching back years. A 2020 quote from comedy acting royalty John Cleese (once a staunch advocate of the BBC, featuring in TV license campaigns such as this) springs to mind, describing BBC executives as “a craven clique of humorless jobsworths, none of whom are worth their salaries.”

For our overseas readers, TV license fees are mandatory in the UK market for viewing any BBC content – video or audio, live or on-demand – regardless of the delivery mechanism, be it cable, satellite, OTA, OTT, or DAB radio. TV licenses bring in approximately £3.2 billion ($4.4 billion) a year for the BBC, while other income streams come from the BBC International business, which the organization will now look to as a beacon of hopefully lucrative hope.

That could mean licensing or producing more content exclusively for broadcasters, operators, or OTT video platform providers on an international stage, which the BBC already does plenty of. Launching one or several paid international streaming services is absolutely essential for the BBC’s future. Granted, it already has the SVoD platform Britbox, operated in partnership with ITV, available in the UK, US, Canada, Australia, and South Africa – but this is merely table stakes.

An important distinction is that Britbox International is a 50-50 joint venture between BBC Studios and ITV, while Britbox UK is ITV’s baby, owning 90% in the loss-making platform. Britbox arrived in North America back in 2017, picking up approximately 1.5 million subscribers across the US and Canada, while Britbox UK has roughly 500,000 subscribers. In 2020, ITV projected a loss of £60 million ($82 million) from Britbox.

Britbox International has been a relative success, offering access to best of British content in one place at a reasonable $6.99 a month – content such as British soap operas that otherwise are not easily accessible for viewers outside of the UK market. The problem for Britbox UK is that all this content is already readily available to license-paying viewers in the UK without requiring another subscription on top.

Today, the TV license fee costs £159 ($217) a year, or £13.25 ($18) a month – more than the average SVoD subscription. This is set to be frozen until 2024, after which there will be a slight rise for three years, before ending the TV license structure entirely in 2027. However, the BBC’s argument has long been that the license fee gives everyone a bit of everything – news, sports, documentaries, dramas, comedies, game shows, children’s content, films, numerous radio stations, and more.

A highly successful invasive species called US streaming services are in part responsible for the BBC’s demise, with Netflix, Amazon Prime Video and Disney+ driving up content production costs by paying over the odds for talent and rights.

We firmly believe Britbox UK needs to go, in place of a reinvigorated and multi-layered BBC iPlayer available globally – one with the capacity for multiple income streams. However, to do that, BBC Studios needs to exit its 10% association with the operation, somehow without upsetting joint owner ITV to the detriment of Britbox International which is where the emphasis needs to be.