Can the BBC beat Netflix? They should be more ambitious than that...

Lord Hall of the BBC observed at the Royal Television Society convention in Cambridge recently that the already crowded TV streaming market is about to get a lot busier with the entrance of Disney and others – like the BBC itself.

His optimistic belief is that this will rebalance the market in favour of the new entrants and at the expense of established players like Netflix and Amazon. Users will choose the BBC for ethical reasons and because it – and other new entrants - will make its content increasingly exclusive to its own platforms.

This is wishful thinking. Lord Hall, and seemingly the whole TV industry, is failing to stand back and consider how they can influence the direction which their industry is taking. Instead they are taking as axiomatic the business model of the first wave of disruptors – Netflix, Amazon et al – and accepting it.

That’s a shame because the flaws in the current model become obvious the moment the consumer is considered. They all work by subscription driven by investing billions – customers have to promise to pay every month regardless of how much they watch. Most people are resistant to doing this over and over with more and more subscriptions. 

No problem, says Lord Hall – programme makers can just hold their content back and make it exclusive to their own streaming service. In other words, beat your consumers into submission if they want to watch something in particular.

We know about this model, because it’s the same approach tried in the newspaper industry - with outlets thus serving less than 10% of their natural audience. It’s bringing a luxury goods mentality to a mass market medium. It doesn’t work.

Broadcasters are driven, in the end, by audience. More audience means more money. The most popular programme makes the most profit. So broadcasters compete for the best creative talent to make the best programmes and when they have a big success, they benefit from it.

When the audience makes no difference to the income, though, the incentives get a bit skewed. A user paying £10 per month pays £10 per month regardless of how much they watch. As long as they don’t cancel, they are producing revenue. That’s not the way to a sustainable future – certainly not for smaller late entrants to the market.

What the TV industry needs to do is challenge the idea of subscription streaming services completely. If they want to get back to a business where consumer and producer incentives are both centred around creating the best programmes, doing it by limiting the amount a consumer can spend and limiting the audience you’re capable of reaching is a pretty awful starting point.

What new entrants need to do is create an alternative market which is a lot more attractive to viewers than the fixed subscription behemoths: an open market with a universal way for users to pay. 

Programme makers should be able to compete for audience – and revenue – through the quality of their creative output and marketing. They should be able to set the right price for their particular offer, perhaps different for different programmes. They should ensure that the value chain is not owned and controlled by the distributors, and that regardless of distributor, their income is determined by prices and deals which they can control.

That market model for newspapers and magazines exists via digital wallet technology, and it could easily be extended to TV and beyond. After all, media of all kinds collectively talk to the same audience – everyone. What’s the point of having countless different ways of dealing with customers? 

The opportunity is much larger than anything streaming can deliver, but doing so requires more ambition, imagination and self-belief than the UK TV industry has yet shown. 

Broadcasters won’t win a sustainable, competitive, growing future for themselves by trying to out-Netflix Netflix, or by fencing off their best content and only showing it to the lucky (or spendthrift) few.

To be fair to Lord Hall, he has the advantage of guaranteed income and free-at-the-point-of-delivery services when trying to sell the BBC to consumers. But nobody else has those advantagesThey should take their destiny – and their revenues – in their own hands by rethinking their market and unlocking far bigger opportunities for themselves and their audiences.

Dominic Young 

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