Market Insight

BBC3 to move online-only in February 2016

November 26, 2015  | Subscribers Only

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

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The BBC is to increase the offering of original content on its online iPlayer service after its plan to move youth-skewing channel BBC3 into an online-only service was approved by the BBC Trust today. After a brief transitional period, the terrestrial TV signal of BBC3 will switch off in February.

The move is expected to save the financially-challenged public broadcaster £30 million ($45 million) a year in costs, with the money saved going to fund new drama on the flagship BBC1. However one of the conditions set by the BBC's regulator is for the BBC iPlayer to be 'developed beyond a catch-up service', with more online-first and third party content.

In addition, the regulator specified that all long-form BBC3 programmes should be broadcast on BBC1 and BBC2, with the remits of both channels adapted to include the provision of programming for young adult audiences. No decision has been made about what will be done with the terrestrial spectrum freed up by the move. The Trust rejected a proposal for a BBC1 +1 channel, but approved extending transmission hours for children's channel CBBC from 7pm to 9pm. 

According to IHS Broadband Media Intelligence, just under 84% of UK households will be covereed by broadband by the end of this year. However, the UK government has committed to extending high-speed broadband to 95% by the end of 2017.

BBC3 launched in 2003, replacing the BBC Choice channel, targeting a core audience of adults aged between 16 and 34. There was criticism from other broadcasters, who argued that this audience group was already well served by commercially-funded services like Channel 4's E4. BBC3's budget has fallen from £91 million a year at launch to £82 million in 2014/15. The Trust did not cite any viewing figures for the channel, but referred to a decline in linear TV viewing by under-35s in its decision. Damian Kavanagh, controller of BBC 3, said in a blog post today that 50% of video viewed by 16-24 year olds is not live TV.  

Our analysis

The Corporation will be one of the first free to air broadcasters to close down a major linear channel and move it online-only. While it should be remembered this is primarily a cost-saving move forced on the BBC more than a deliberate strategy, other broadcasters will be watching closely to see whether the iPlayer route is a more effective way of connecting with younger audiences than a linear channel.

Some 80% of BBC3's £30 million annual budget will be allocated to long-form programmes, including comedy, factual and entertainment. According to BBC's Kavanagh, the remainder will be spent on various types of 'new form content' including short video, picture led stories, animation and authored pieces. He cited #threebrief with Professor Green, a recent trial for a BBC3 programme posted on Facebook, which registered over 1.2 million views in two days.

The BBC iPlayer has already been reinforced, with catch-up windows extended from seven days to 30 days, and an increasing amount of original 'digital-first' programmes including short form tie-ins for BBC shows like The Apprentice and Match of the Day, a video channel from the Radio 1 network, and long-form programmes like documentary Bitter Lake and, more recently, Fear Itself. The BBC reported that it spent £201 million on the iPlayer in the 2014/15 financial year.

Geography
UK
Organization
BBC
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