David Farnor | On 05, Nov 2017

Netflix, Amazon and other online streaming services could spell bad news for British TV, the BBC has warned this week, as funding in homegrown productions face a “serious threat”.

The rise of streaming platforms has been both a boon and a risk to UK broadcasters, and as they get bigger and evolve, that relationship between traditional British telly and online video is only going to get more complex.

This week, BBC Director General Tony Hall highlighted the danger for British programming. Speaking in Liverpool on Thursday, he warned that the amount spent on making programmes in Britain could fall by as much as £500 million a year over the coming decade. That amount might sound like a drop in the ocean, when compared to Netflix’s planned spend of $8 billion on original content in 2018, but for the BBC, it is a significant sum: the corporation collects just over £3.7 million a year from the Licence Fee. While Netflix’s spending is on worldwide content, not just British productions, that disparity in scale and budget is key to the difference between the organisations.

The half a billion pound funding shortfall was highlighted by a report from Mediatique, commissioned by the BBC to examine the future of the industry. The research marks a shift in the way that Netflix and other online players interact with homegrown broadcasters: in recent years, SVOD platforms have proved a major boost to the industry, with international sales and commissions rising 5.3 per cent year-on-year in 2016 (and 13 per cent since 2010) to £798 million, helping to offset a decline in revenues from domestic production. Digital services made up a sizeable £468 million of that, with Netflix and SVOD companies commissioning a total of £126 million worth of UK content last year

Co-productions are a particularly popular form of investment, with Netflix teaming up with E4 for Crazyhead, ITV for Paranoid, the BBC for The Last Kingdom, a new Troy epic and Black Earth Rising. Amazon, meanwhile, has teamed up with Channel 4 for Catastrophe and ITV for Vanity Fair and White Dragon. But now, industry experts are warning that the era of co-productions is coming to an end, as Netflix and others begin to look to fund their content by themselves. That change will not happen immediately, with a number of co-productions already in the pipeline. It will not mean that investment in British production ceases – in the case of The Crown, for example, Netflix spent £100 million on the royal drama – but Netflix’s focus is global, not local: as they turn to productions that will be bigger and more successful internationally, the risk is that British voices and content will struggle.

“The reality is that their investment decisions are likely to focus increasingly on a narrow range of very expensive, very high-end content – big bankers that they can rely on to have international appeal and attract large, global audiences,” warned Hall. “Even the most generous calculations suggest they are barely likely to make up half of the £500m British content gap over the decade ahead. And a more realistic forecast points to substantially less.”

The BBC notes that 83 per cent of independent production companies in 2007 were British or European-owned, but that this share has dropped to less than 40 per cent, as US multinationals expand their ownership.

“In the UK we often think of the BBC as a big player, but today the media market is truly global,” added Hall. “And in that vast solar system, we are tiny compared to the huge gas giants of the US And every day they’re getting bigger.”

His comments echo those of Jane Featherstone, head of production company Sister Pictures. The former head of Judos, she delivered this year’s BAFTA Television lecture in London last weekend, warning that streaming service’s appetite to work with UK broadcasters is on the wane.

Sister Pictures was founded in 2016 by Featherstone, who has credits that span from Humans and Spooks to Broadchurch. The company is at the intersection of British and international television, with commissions from ITV and the BBC, including BBC One’s Duty/Shame (aka. Girl/Haji, which is a co-production between the Beeb and Netflix.

Featherstone hailed Netflix as a “brilliant creative partner”, says Variety, and praised the exciting changes taking place in the industry, but cautioned that SVOD players are likely to slow down or stop their co-producing in the coming 12 to 18 months.

“Co-production has been a buzz word for the last five years,” she said. “That honeymoon period, consider it over. Up until this point, this co-funding meant relatively subtle changes to the type of drama being commissioned – perhaps they’re a little bigger and more global-facing. Henceforth that subtlety will replaced by less nuanced programs.”

“We know, because they have told us, the SVODs are going to start ramping up commissioning of only fully owned original programs, meaning they won’t need to co-produce any more,” she continued. “Why keep investing in shows when they don’t own the territory most likely to make that show a hit? It doesn’t make sense for them. The co-production tap is going to be turned off, or at least reduced to a trickle. It’s already happening with [Netflix series] ‘The Crown’… and I reckon we have a year or 18 months before the big FANG players stop producing entirely, except maybe for specific talent-driven content.”

It is not just co-productions that are a risk: as online services increase in size and reach, they are also drawing advertising revenue away from traditional media, which means that commercial broadcasters such as ITV are also facing stiffer competition for revenue.

“We have to face the reality that the British content we value and rely upon is under serious threat,” Hall added. “That is why we must continue to innovate, back new ideas and take creative risks. We will never simply compete on money alone. It is why the reinvention of the BBC for the modern age is so important.”

How the BBC innovates and reacts to the shifting nature of the TV landscape is a divisive and complicated issue in itself: the Licence Fee recently changed its terms to include BBC iPlayer usage, highlighting how different viewing behaviour is now compared to 10 years ago. If you can’t beat them, join them, goes the old adage. But if the BBC were to change its funding method to a Netflix-stye monthly subscription fee, for example, would it be able to be held to the same Royal Charter that enshrines its vital objective reporting, ongoing investment in homegrown talent and unique public service mandate? Or would it then invite a commercial subscriber base that extends beyond core British users? Where, then, would be the boundary between the BBC and Netflix? Whether friend or foe, the distinction between the two entertainment giants remains as important as ever.

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