Market Insight

BBC to launch standalone streaming service in US next year

September 18, 2015  | Subscribers Only

Tim Westcott Tim Westcott Director – Research and Analysis, Programming, IHS Markit

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The BBC is to launch an over-the-top (OTT) streaming service in the US next year as part of a move to deliver its programmes direct to the public and to boost revenues from its commercial arm, BBC Worldwide.

BBC director general Tony Hall, speaking at yesterday's RTS Convention in Cambridge, said the service would offer 'BBC fans programmes they wouldn’t otherwise get, showcasing British actors, our programme-makers and celebrating our culture', No details of exact launch dates, pricing or branding of the service were revealed. However, the service will not be a global version of the BBC iPlayer, the Corporation's licence fee-funded on demand service.

Hall also rejected the idea of selling off BBC Worldwide - an option which the government floated as part of its review of the BBC Charter. In the last financial year, BBC Worldwide generated revenues of more than £1 billion and returned £226 million to the Corporation. These revenues covered 70% of the funding of the BBC's wildlife documentary Life Story and half of the budget of some of its biggest dramas last year.  

'While every major global player is creating a more integrated system, it would make no sense for us to go the other way and break up a system that is delivering returns that are essential to support public service programme,' said Hall. He added that the BBC would be working with global partners to increase commercial revenues and exploit digital; opportunities.

Existing partners include AMC Networks, which last year acquired a minority stake in BBC America, Scripps Networks, which owns a 50% stake in UKTV, and MSM in India, with which the BBC is launching a new factual channel called BBC Earth. Hall said the BBC aims to increase annual revenues from BBC Worldwide to £1.2 billion a year, an increase of 15% over the previous five years.

Our analysis

The BBC is under pressure both to cut costs - after the latest exceptionally tough licence fee settlement - and to adjust to a world where programming is increasingly consumed on digital platforms. The last few months has seen a series of announcements of OTT services by HBO, CBS, Starz, and Viacom. All of BBC Worldwide's non-news channels are pay, so the challenge of OTT services is to tap into the market of consumers who do not have a traditional pay TV subscription without cannibalising its linear TV business.

OTT businesses can also be cheaper to roll out and easier to scale than conventional linear channels. BBC Worldwide launched an app for its preschool CBeebies channel in May this year which it plans to roll out to the rest of Latin America and tyhe US Hispanic market later in the year.

One of the key decisions facing the BBC is whether it will have to cut back on the number of TV and radio services it operates. Governing body the BBC Trust has already approved a plan to convert BBC3 into an online-only channel next year. This is primarily a cost-saving measure, but also one seen as bringing the Corporation more into contact with the channel's young adult demographic.

As mainly national broadcasters like the BBC look for ways to export their content worldwide, the European Union is consultiong on plans to introduce a digital single market acorss the 28 member states on the European Union. John Whittingdale, the UK secretary of state for culture, media and sport, said the UK government supported the 'overall ambition' of the plan and felt it was 'only right for someone who has paid for access to a subscription service - or even just the licence fee - to be able to access that content when on holiday overseas'. He added that it was up to the industry to deliver a solution for what he called 'portability'.

He added that the issue of cross-border access (to TV services) was 'trickier' and that the UK government is pressing for more detail about the Commission’s proposals. 'Striking the right balance is key - we need to make sure that investment remains attractive and creators are fairly paid. However, the current difficulty that those living abroad have in accessing UK channels and content is also a driver for piracy.'

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