The rise of online TV – and its cost for the BBC
James R | On 03, Jul 2015
The way that people are watching TV is changing, as young viewers increasingly turn to the web for their video fix, rather than the living room telly. But that shift comes at a cost, as BBC employees have discovered this week.
The latest statistics from Ofcom highlight the growing trend towards streaming, with people between the ages of 16 and 24 only watching half of their TV live. The rest is taken up by VOD, be it Amazon Prime, Netflix, BBC iPlayer, All 4 or other services.
Viewing of live news, for example, has fallen by 29 per cent between 2008 and 2014 among younger viewers, to 39 minutes per week per person. Now, 50 per cent say that the web is their major source of news.
That is not to say that TV is dead in the water – consumption is, as we have discussed before, still high. But the figures confirm the shift among certain age groups that will gradually ripple up through the generations. With online TV and VOD usage climbing 25 per cent among 35 to 44-year-olds since 2007, Ofcom cautions that public service broadcasters, such as the BBC and Channel 4, must innovate to stay relevant.
“More people are watching online or on demand, and this presents challenges as well as opportunities,” says Sharon White, Chief Executive of Ofcom.
“They must continue to find new ways of connecting with audiences, and the PSB system needs to evolve to ensure it remains effective in the digital age.”
Indeed, Channel 4 has embraced digital TV to a major extent, revamping its entire website to integrate on-demand content into its linear broadcasts and other media. It also has its own online platform for short-form videos, which are designed for younger viewers who watch quick content on the move. The focus has paid off: since its launch last summer, Channel 4 has racked up over 3 million shorts views.
The BBC, meanwhile, has increasingly emphasised BBC iPlayer as a service in its own right: the BBC Trust just this week approved plans to develop it into a more standalone platform, taking it beyond its initial catch-up purpose.
But this digital progress is coming at a cost, thanks to the PBS system, which still relies upon a licence fee to be paid by viewers. The licence fee, which will be revised as part of the Beeb’s royal charter negotiations next year, is already under fire from Culture Secretary John Whittingdale and – in an age of subscription-based services – appears increasingly irrelevant to younger viewers, who primarily catch up online.
Indeed, a loophole in the regulations means that iPlayer users only have to pay a licence fee (currently £145.50) if they watch TV live.
Now, as online TV viewing grows, licence fee income in 2016/17 is forecast to be £150m less than it was expected to be in 2011. It has already been frozen for seven years.
To cover this drop in income, the BBC has announced that it will axe more than 1,000 jobs.
“A new financial challenge means additional savings must now be found,” said the BBC in a statement.
“Over recent years the BBC has built an impressive savings record that will deliver over £1.5bn of savings a year by 2017. Much of this has been done through cutting administration and property costs, pay and headcount restraint, plus tough decisions like more daytime repeats and shared sports rights.”
The new measures being proposed will deliver £50m in savings from merging divisions, cutting down management layers, reducing managers and improving processes. But they will come as a blow to the BBC employees who will lose their jobs – a sad reminder of how urgent it is for the licence fee, as part of an old-fashioned TV industry and culture, to be modernised to cover digital services in some form.