British TV can collaborate to compete in the digital age
Speech by Sharon White to Enders/Deloitte conference, 8 March 2018
Eight in ten adults now use catch-up TV to ‘binge watch’ box sets.
Children are watching a third less television than they did at the start of the decade.
Young British teenagers recognise the name ‘YouTube’ more than they do ‘BBC’.
These are some recent Ofcom findings. Like the clips I just showed, each tells a story about our changing relationship with traditional TV.
Today, I’d like to explore what those changes mean for the broadcasters with a special remit to serve the public good; and to examine how, through shared strength and close collaboration, our broadcasters can continue to compete in the global, digital age.
Why PSB matters
Public service broadcasting has a long and proud tradition here in the UK. No other country can rival the scale and quality of our public service broadcasting. Just compare the generic formats that dominate the schedules in places lacking a strong PSB tradition.
More than ever, in today’s era of uncertainty and volatility, we look to the PSBs to provide programmes that reflect our changing society and help British viewers make sense of the world.
PSBs cohere our society, through shared experiences of drama, entertainment and learning. Thanks to the likes of The Last Leg, Undercover, Blue Planet and The Agenda, the nation’s homes and workplaces are scenes of impassioned, daily debate.
Because people have never lost the need for a common sense of place, purpose and values. Of all the institutions that bind British society, none is better positioned to fulfil that need than public service broadcasting.
Beyond the screen, the UK’s public service broadcasters nurture new talent and invest in research. Their creative talents have helped to make the UK a world-class centre for independent production. And their influence carries into the commercial sector.
Sky News and Sky Arts have become important, trusted features of the UK’s news and cultural landscapes. Local TV broadcasters provide a voice to people in their areas who seldom receive airtime.
That collective strength in UK broadcasting is inspired by almost a century of public-service tradition. Today’s viewers still value it. Our research shows that eight-in-ten viewers and listeners believe PSBs deliver high-quality shows.
Some nine-in-ten people said it’s important they can trust PSB news. Amid the volatile seas of politics and technology, our public service broadcasters remain a trusted port of call for people seeking fairness, accuracy, insight and impartiality.
But we know television is changing fast. Globalisation and digital media – the same forces that heightened our need for trusted news – have led the PSBs to examine how they continue to thrive.
A system that has endured for decades now faces three broad challenges.
The challenges facing public service broadcasters
First, our viewing habits have been revolutionised by technology. Superfast broadband and 4G mobile are reaching more places, allowing people to watch programmes whenever, wherever they want.
And although nine-in-ten of us still watch traditional TV on the box, two thirds of adults also use catch-up players. Almost half pay for streaming services like Amazon and Netflix.
The way we access even traditional TV is changing fast. For families like mine, prone to arguments over whether to watch Arsenal or Strictly, voice and hand signals could replace the battle for the remote control.
The second challenge is fragmentation. Every day, hundreds of television channels compete for our attention with tablets, smartphones, watches and games consoles. Social media and the internet occupy a fifth of teenagers’ waking lives.
At the same time, our society is more diverse than ever before, making it more important for PSBs to represent and appeal to everyone.
The third question is how to compete financially. Television, of course, has become a worldwide market, where national broadcasters vie with billion-dollar, global players.
Netflix spent more than £6 billion on content last year, more than twice the PSBs’ combined budget for UK programmes. Facebook, Google, Amazon and Apple are all investing in original shows. A single episode of premium drama can now cost upwards of £7 million.
So global scale is vital. The need to compete has fuelled a rush to combine. AT&T plans to merge with Time Warner, Disney hopes to acquire Fox, and Comcast has bid for Sky. Channel 5 is already part of a global group in Viacom, and other UK channels may be attractive to foreign buyers.
While the BBC’s licence fee is fixed in real terms to 2023, commercial PSBs are having to diversify in the face of a sluggish advertising market and slower growth in pay-TV, which helps pay for some of their channels.
We understand the scale of those challenges. So what can Ofcom do to help support PSBs?
Supporting the public service broadcasters
Our first role is to promote free, universal access to public-service channels.
Ultimately, we expect television will increasingly be viewed over the internet. But today, digital terrestrial television is still a valued service in 19 million homes; and we will support it. We expect public service broadcasters will have unchallenged access to these digital airwaves for the next decade or longer.
Ofcom can also keep PSB channels at the top of traditional programme guides. This can help sustain audiences and revenue, and allow Sky, Virgin Media and YouView to make valued PSB programmes easy to find.
So later this year, we will consult on updates to the Code governing electronic programme guides. We will ensure the main PSBs remain prominent; make smaller PSB channels more visible; and provide more detailed guidance to ensure the rules can be enforced.
Now I recognise this cannot be a long-term solution. Plenty of viewers are already turning away from traditional guides, finding programmes through players, text searches and recommendations.
New digital platforms are beyond the scope of today’s regulation. That means, if Parliament believes the future health of PSBs requires prominence in on-demand services, it would need to pass new legislation.
Ofcom will also do everything we can to help PSBs retain the support and engagement of the public, by encouraging broadcasters to make programmes around the country that reflect each part of our society.
We’ve already introduced new rules to promote original shows, made in the UK, on the BBC. There are new quotas to arrest areas of decline, such as arts, music, comedy and children’s programmes.
We are requiring our national broadcaster to spend the same on programmes, per head, in every UK nation. And we are strengthening rules to ensure diversity in the BBC’s commissioning process.
How the PSBs can help themselves
But in any sector, regulation can only go so far. And in the longer term, the value of terrestrial airwaves, and the importance of prominence on traditional set-top boxes, will decline. That means that public service broadcasters must keep adapting for the digital age.
The PSBs are special institutions, with a unique opportunity. Their series and productions have defined British television over decades, coursing through our national life. Now they have the chance to carry that influence through to our children’s generation.
They can invest in new methods of distribution, and find fresh ways to reach younger people who are turning away from traditional TV.
The BBC and ITV are already making whole series available on demand, tapping into the binge-viewing habits of younger audiences. More than half of the UK’s 16-34 year-olds have registered with All 4 for on-demand content from Channel 4, which has a special duty to serve children and young adults.
And by making programmes that authentically portray modern lives across the UK, our PSBs can retain a level of trust, influence and relevance among British audiences that overseas technology giants will struggle to match.
With a few high-profile exceptions – such as The Grand Tour on Amazon, or The Crown on Netflix – the global players are not putting their money into UK stories.
Our public service broadcasters still account for the vast majority of investment in UK-made shows - 82% of commissions in 2016. With their heritage, remit, regional bases and experience in genres like news and arts, PSBs are perfectly placed to create the UK content that British viewers demand.
In fact, without public service broadcasting, most of this content would not get made at all.
The BBC, for example, is the only major provider of free-to-air, UK-made programmes in fields such as classical music, religion, arts and non-animated children’s programmes. By renewing its commitment to these genres, the BBC can ensure it retains its central role in British life.
On the world stage, the PSBs can showcase the UK through brilliant exports like Peppa Pig, Sherlock and Vera. They can strike more co-production and funding deals, backed by the global reputation of our creative industries, and the reach and power of the English language.
By working with the likes of Facebook, YouTube, Netflix, Amazon and Apple, PSBs can benefit from these companies’ immense global reach. They may look to share expertise in technology, marketing and programme-making, in return for investment or prominence on digital platforms.
And broadcasters will increasingly need to strike their own deals with TV makers and digital platforms, harnessing people’s demand for their content.
Our PSBs may increasingly need to join forces to increase their bargaining power, just as they are doing with TV manufacturers. Increasingly, they will need to collaborate to compete. We will take account of that need when assessing competition in the market.
We also expect broadcasters to support innovation and technology. They’ve done it before. Channel 4 was the first PSB to launch a video-on-demand service, and the success of the BBC iPlayer paved the way for the likes of Netflix.
The BBC is rightly looking to develop the iPlayer, the UK’s most popular catch-up service, so it remains a world-class product. But the world is moving on. If the BBC is to remain relevant, it also needs to reach audiences wherever they are, in ways that are convenient for them. That means fair and flexible access to its content.
The PSBs will inevitably have to partner with their competitors, finding common ground to navigate the changing landscape together.
These are some of the ways our PSBs can expand the routes and partnerships that allow their content to be seen by the greatest number of people – on smart TVs, phones and digital devices.
I am backing our public service broadcasters to meet the challenges that face them.
We know the history of British television is one of adaptation and renewal. Even as digital services have transformed the level of choice in our living rooms, PSBs have built channel portfolios that still command seventy per cent of our TV time.
With their on-demand players, apps and podcasts, PSBs have empowered viewers and listeners to shape their own schedules. By requesting viewers’ data, they have moved closer to their audience through personalised services.
Throughout this period of extraordinary change, public service broadcasting has remained strong. Our PSBs have proven their ability to embrace technology, expand their horizons, and harness their reputation around the world.
By staying on that path, and with Ofcom’s support, public service broadcasting can extend its proud history of success into the digital age.