The BBC Trust has approved plans to allow users to pay to download programmes from an online BBC Store. The BBC iPlayer will be extended to offer programmes free up to 30 days after broadcast and will include links to allow users to buy programmes from the BBC Store, which will be run by BBC Worldwide, the commercial arm of the corporation. Tony Hall, the director general of the BBC, has meanwhile launched his campaign for the renewal of its Royal Charter by suggesting that any use of the BBC iPlayer should require a television licence.
The plans for the BBC Store come after the apparent failure of BBC Worldwide to establish a successful subscription model for the BBC iPlayer globally. A ‘pilot’ service was launched in Europe in 2011 and later in Australia and Canada but was never extended to the United States. The service will now be rolled into the BBC.com web site.
The BBC iPlayer, available as part of the public service in the United Kingdom, plans to extend the free catch-up window for viewing programmes from seven to 30 days. Search will be integrated across catch-up and commercially available programmes, with a “seamless purchasing experience” through a “single BBC account registration”.
While the commercial arm is attempting to add an online retail shop to the BBC iPlayer, the BBC is also suggesting that any of the iPlayer should require a television licence.
Tony Hall, the director general of the BBC, kicked off the campaign for the renewal of the BBC Charter with the traditional defence of the licence fee, arguing that it is better value than ever.
Speaking at the Oxford Media Convention, he went further, saying: “Our view is that there is room for modernisation so that the fee applies to the consumption of BBC TV programmes, whether live on BBC One or on-demand via BBC iPlayer,” he said.
Currently, viewing programmes online at the same time as they are transmitted generally requires a television licence, but viewing then on demand does not.
The first month of 2014 marked the most successful yet for the BBC iPlayer, with 242 million requests for television programmes. Of these, 46% came from tablets or smartphones and only 25% from television devices. Only 10% of requests are for programmes at the time of transmission, rather than after the broadcast.
The commercial case for the BBC Store is apparently based on the assumption that over two thirds of its transactions will come from the BBC iPlayer.
The BBC Trust, with regard to the advice of the communications regulator Ofcom, concluded that the launch of the BBC Store does not constitute a significant change to public services so does not require a public value test.
At launch, the BBC Store will offer around 6,000 hours of recent programmes and 4,000 hours of archive material, including around 3,000 hours of library material that is already available commercially, with a further 500-1,000 hours of archive programmes due to be released each year.
The Trust determined that this will not distort the market, primarily because the rights for BBC archive content will be made available on a non-exclusive basis to third-party commercial providers, and any public service assets used by the BBC Store, including iPlayer technology, will be made available to others at a fair price.
The BBC is treading warily. The last effort to establish a similar model of selling online video outside the catch-up window, as part of the consortium of broadcasters known as Project Kangaroo, fell foul of the Competition Commission.
It is envisaged that the commercial programming will be accessible through a ‘virtual locker’ that will allow purchased programmes to be viewed through the BBC iPlayer. Whether this will satisfy users is another matter.
The BBC Trust observes: “It is hard to see how the development of a virtual storage locker could realistically have any chance of setting a de-facto industry standard. Indeed, it seems more likely that the BBC Store would follow whatever industry standard emerges in order to overcome the disadvantage of its limited content offering, by making its virtual locker compatible and interoperable with others.”
On the potential impact on online video subscription services, such as Netflix and LoveFilm, now Amazon Instant Video, the BBC Trust suggests that it is “highly unlikely” that customers would discontinue their subscriptions to purchase BBC programming from the BBC Store. It suggests that consumers are more likely to switch to such services in order to access a wider range of television programmes and movies.
Suzanna Taverne, who led the assessment by the BBC Trust, said: “In considering BBC Store, the Trust conducted a robust assessment and sought the advice of external parties. It concluded that BBC Store is a worthwhile commercial service that supplements what the BBC makes available through the licence fee and promises to bring value not only to audiences but also to the wider creative industries.”
The BBC Store is a logical attempt to mitigate the structural decline in revenue from the sales of box sets of programmes on physical discs. It will also provide the belated basis of a direct to consumer online retail offer in overseas markets.
BBC Worldwide already has an online BBC Shop, as opposed to a store, selling physical products. However, it is difficult to compete with the vast scale of other online retailers, like Amazon. There may be a lesson there.
One might wonder how successful the online video retail model will be, particularly if competitors are guaranteed access to similar programming for potential inclusion in their own aggregated retail or subscription services.
The real question is whether users will prefer to subscribe to subscription video on demand services, where there is a choice of tens of thousands of titles.
The BBC appears reluctant to pursue a subscription model, for fear of upsetting its distribution partners on the one hand or undermining the case for the licence fee on the other.
To put the retail activities of BBC Worldwide in perspective, in the year to March 2013, the consumer products division turned over £181 million, down on £211 million the previous year, with an operating profit of £38 million. In total, BBC Worldwide delivered £156 million in returns to the BBC, on sales of £1.1 billion. Over the same period, the BBC public service spent £3.8 billion and received £3.6 billion from the television licence fee.