The top team from the BBC travelled from W1A to SW1A to face a gentle cross-examination from the honourable members of the Digital, Culture, Media and also Sport committee. One of the questions on which they were pressed was how they were addressing younger viewers. Give the apparent success of subscription services like Netflix, they were asked whether the BBC had an in-principle objection to offering a similar paid-for service. Yes, that’s a tricky one, isn’t it?
The chair of the committee, Damian Collins MP, asked Lord Hall, the director general of the BBC, whether the BBC was geared up to deliver for future generations that watch programmes in a very different way.
The head of the BBC responded that linear television is still relevant and that BBC1 was still the best way to reach most young people. However, he said the corporation was constantly modifying and reinventing its iPlayer, saying: “I want that to be the place people go to for as much BBC programming as they want.”
He was asked why it was that one could watch a re-run of a BBC show by paying a subscription to Netflix but not watch it in the same way from the BBC unless it was on iPlayer.
The response was that the BBC iPlayer was originally promoted as a catch up service but that “it needs to be the way in which people see and can consume the BBC in future”.
That prompted the question whether the BBC is actively looking at a subscriber service to enable people to access programmes from the back catalogue.
The answer was that the BBC is looking at ways to allow people to access back catalogue. The chair press further on this, saying: “So there is no in-principle objection from the BBC to offering a paid-for service like that, which would be for programmes that are not currently freely available through the iPlayer.”
Lord Hall responded that the current Charter Agreement allows the BBC to experiment with those sorts of services but added the key way to fund the BBC will continue to be through the licence fee “because that gives something for everybody.”
The BBC Store was an attempt by BBC Worldwide to offer a paid download-to-own model. It launched in November 2015 and closed within two years, with an offer of a full refund of any money paid for programmes.
“A number of people thought that was the right way to go, but it didn’t work,” said the director general of the BBC. “It was an experiment. We got out of it quick.”
He acknowledged that streaming, rather than download-to-own, was the way to go. “What Netflix, Amazon and others have done has been utterly brilliant,” he said. “It has transformed the way we all consume things in a way that, certainly when the idea of Store was being pushed forward, you could not have predicted.”
It is interesting to note that Netflix announced its online streaming service at the beginning of 2007. The BBC launched its online streaming service at the end of that year.
The questioning turned to whether young people have any problem with signing up to the licence fee.
“They are happily signing in to content and also, where they are asked, buying the licence,” responded Anne Bulford, the deputy director-general.
The BBC iPlayer now requires users to sign in and give an email address and postcode, while being warned that they also require a valid television licence to use the service.
How much extra income has this brought in? Her estimate was that it contributed “about £12 million in the second half of the year”. In 2016-17, the BBC received £3.78 billion in licence fee income. So the requirement to sign in to the iPlayer has produced an uplift of substantially less than 1% in income.
Asked by the chair “Would it not make sense for licence fee payers to have a PIN that they use to access digital services like the iPlayer?” she responded “That could come in time — it is not something that is ruled out and we continue to look at it.”
The problem is apparently that the licence fee is based on households rather than individuals, although as the chair observed, that is also the case for Netflix. He suggested: “It would be a pretty fail-safe way of the BBC ensuring that people who use its digital services pay their licence fee.”
The response was that “Netflix did not begin from where we are, which is with 26 million homes that, on the whole, are paying.” Although of course Netflix started out as a DVD by mail business and transitioned to a streaming model, which now has around 110 million subscriptions worldwide, each offering multiple user profiles.
In comparison, the BBC has around 10 million active, signed-in users, out of a population of around 50 million adults.
The interrogation was far from hostile and the responses were not evasive, but there was some evident frustration among the committee that the BBC seems to find it hard to adapt to new business models.
However, it is notable that the idea of subscription, which would once have been anathema to the public service values of the BBC, is being contemplated, even if it is apparently not being taken very seriously.
Given the challenge of achieving anything like the income received from the television licence fee, that is perhaps understandable. The key question is how long it will continue to be a sustainable position.
The evidence to the Digital, Culture, Media and Sport Committee on the BBC Annual Report and Accounts 2016-17 is available on the UK Parliament web site.