This week we saw the second of two strategic announcements from senior execs in the state-owned television industry. Following Tony Hall’s recent announcement of an ‘internet-first’ strategy for the BBC, France Télévisions’ Director of Future Media Eric Scherer declared at a trade show this week that “the TV industry will now have to work on a ‘mobile-first’ strategy.
From ‘internet-first’ to ‘mobile-first’ in a month is breathless stuff. But we, like many in the TV industry, were left wondering what either of these things actually mean, let alone if they are a good idea? These questions have to be asked given that, after 20 years of internet and mobile disruption, around 90% of TV is still consumed via linear broadcast (with recorded broadcast content accounting for 7% or the remainder). Even the missing 3% is not wholly web, being shared between platform-delivered (ie non-web) VOD on TV services like SkyOnDemand and web based OTT video on a variety of devices including STBs like Youview. The difficult truth is that the internet, fixed or mobile, is still a minor distribution platform for TV, so why be ‘internet-first’.
For the BBC, the ‘internet-first’ strategy was a broad statement which we have to assume covers TV and radio output, as well as (by definition) web and mobile? An ‘internet-first’ strategy would affect each of these areas differently, so we intend to deliver a two part analysis starting with TV. The second part will look at radio, which we profess to know less about at Decipher, so we intend to use this prompt to go and ask various experts who do know and summarise what we find. Firstly TV:
An ‘Internet-First’ TV strategy
If we are being charitable, we must assume that ‘an internet-first BBC’ is a statement that covers all aspects of the BBC’s television business. This would include commissioning, production, media management and archiving, not just consumer distribution. In fact it is in those back-of-house elements of the TV industry that an internet-first strategy could make sense. The problem for us is that every industry in the UK is re-booting itself to be internet-first in their back of house operations areas. Its not sufficiently unusual to warrant the kind of announcements being made by Tony Hall and Eric Scherer in the consumer press. The focus of those comments was clearly the consumer distribution and consumption parts of the TV value chain.
We are fortunate at the moment to have an issue in the public eye that brings the consumer distribution question into sharp focus. The BBC has announced that it intends to move BBC3 to being an ‘online-only’ channel. This is an interesting proxy for the broader TV versus the web debate. Initially positioned as a youth-oriented initiative, everyone outside the BBC has quickly come to the realisation that this is just a cost cutting decision (with some strategic posturing prior to charter renewal included). However it is still a useful case study as it allows us to break the subject of an ‘internet-first’ approach down into into its constituent parts.
The industry has been describing the proposals as ‘moving BBC3 online’. The problem with that statement is that it is too vague to be helpful. We think that there are three elements to the proposed BBC3 change that have to be separated out to be properly understood: moving from DVB to IP; changing from linear to on-demand; and a slashing of the commissioning budget.
Moving distribution from DVB broadcast to IP. BBC3 is currently a digital linear broadcast channel distributed over DTT, DSat and DCable. The most obvious part of the proposed change is the removal of this dominant, over the air, broadcast distribution. This entails de-listing BBC3 from the nation’s programme guides (EPGs). However, it is completely possible that BBC3 could have been moved ‘online’ while keeping BBC3 as a linear channel, without changing its programme commissioning and scheduling, or losing its EPG slot in the UK. It could have achieved this by simply turning BBC3 into an IP linear channel distributed over broadband into set top boxes.
All Freeview (DTT) boxes and screens sold since 2012 have been required to include the software necessary to receive linear IP channels and present them in the EPG. All Youview and Virgin Tivo boxes can do this by default. The soon-to-arrive new Sky operating system should also allow Sky boxes to do this. This means that by the end of this year it will be possible to deliver a streamed IP channels into a significant number of STBs on every platform across the UK fulfilling the BBC’s mandate to be everywhere. Some channels are already exploring this, and it is a little known fact that BT Sport is predominantly an IP streamed channel.
This, theoretically would allow the BBC to give up expensive spectrum on DSat and DTT while keeping the channel. The downside (as with a lot of ‘internet-first’ strategies) is that it wouldn’t give you guaranteed delivery and quality of service across the whole of the UK. BT Sport only works in homes with fibre broadband, and only those with the latest of boxes. That’s not a position that the BBC could sustain for one of its linear channels which need to be national and ubiquitous. However, many smaller channels are currently doing the maths on giving up their broadcast spectrum for this kind of move and would appreciate the BBC giving PR to the concept. It is a shame that it’s not what is being proposed.
From ‘Linear’ to ‘On-demand’. The second part of the proposed BBC 3 strategy is the most significant. The proposal is to turn a ‘linear with on-demand’ concept into an ‘on-demand only’ concept. This is a more significant move given the BBC’s broadcast channel heritage.
It is important to note that, because of the prominence of on-demand in most new set top boxes, it is conceivable that BBC3 could maintain a significant presence in set top boxes even if it moved to on-demand only distribution. This could be as simple as a well branded on-demand area in the EPG, with prominant branded banners and prompts. However, to do this the BBC would have had to work with the major platforms to deliver on-demand content in their specific encoding formats (eg on Sky it would have to be configured in their proprietary encoding) and this is not what is being proposed. BBC3 is being moved into pure web IP, and is therefore not able to play in all boxes.
Clearly the word ‘broadcasting’ in the BBC name is an anachronism, but to most of its audience linear channels are a bedrock of their heritage. The BBC gets gifted the two most commercially valuable EPG slots on every set top box in the country for these linear channels. There are many commercial channels that would pay handsomely for the use of Channels 1 and 2, and it raises the question of whether the BBC has any obligation in their public service remit to actually promote the use of linear channels (whether ‘broadcast’ up in the air or over an IP network). Every non- BBC person we have asked this question to has responded ‘yes’! Every BBC person we have asked has responded ‘no’! But if they are being internet-first and NOT promoting linear to new audiences like the fabled ‘youth’, should they then be required to give up Channels 1 and 2?
It is questionable that the BBC3 brand has any meaning to the youth audience without it being part of a channel. Interestingly, given BBC3’s innovation heritage, it would have been possible for its new iteration to have become something even more sophisticated and groundbreaking, maintain its linear distribution and EPG position, yet still move completely on-demand. For those of you who remember the Homechoice platform, you will recall that they delivered on-demand content via linear channels with EPG listings. This was known as pseudo-linear and was used to best effect on their music channel line up – the VMX channels. You could jump forward or back between programmes, or use a programme as a gateway into the VOD archive of that show. Homechoice and its VMX channels were a decade ahead of their time. Many of us have been calling for the return of this format and for the BBC it would mean they could maintain a BBC3 channel in the EPG line up while still turning on-demand only.
It is possible to make the case that the BBC (via mechanisms like BBC3) have an obligation to teach the youth market about the value and utility of broadcast TV as this part of their original Reithian education remit. Many of us feel that the BBC, rather than following youth online, should be providing groundbreaking innovative methods for redefining linear for a YouTube generation. A pseudo-linear channel would be a groundbreaking way of bringing the troublesome ‘youth’ audience into using linear (albeit a radically redefined version of linear) and getting them in the habit of using the EPG. Unfortunately this is not what the BBC is proposing either.
It is clear that the BBC intention is to move the BBC3 concept onto a web site with distribution of its on-demand via iPlayer. This is a move that is being resisted heavily by the existing programme makers who have repeatedly broken new talent via BBC3. More surprisingly, it is also being resisted by many of the newly emerging web talents, who had viewed BBC3 as their route into mainstream linear broadcasting. The last thing they need is another web site.
Cost-cutting – There should be only one main aspect to the cost-cutting within the BBC3 proposals: reduction of distribution costs. In a utopian world, these savings could be shared between the accountants and the programme makers, with have the savings diverted to an enhanced content budget. However, it appears that the BBC are not planning on giving up the broadcast spectrum freed up by the proposed move, but are going to divert it to other uses. Their broadcast costs are going to stay roughly the same after the great ‘internet-first’ moving ‘online’ revolutions. Unfortunately, this means that the content budget is going to have to deliver a much larger part of the savings.
OFCOM insist that to qualify for a broadcast licence, a channel has to deliver a set number of hours of unique programming. So the need to continually commission a set number of hours of programming to feed the demands of a linear channel can prove onerous. Moving online removes that requirement and burden on BBC’s finances of the content part of the channel. The the youth oriented parts of the production sector are already feeling the pain.
Conclusions – go lean, not just IP.
For the techno-pedants amongst us, it is clear that ‘internet only’ need not mean on-demand but can cover all sorts of fun new IP based linear channel distribution. Depending on how you define it, it doesn’t even have to mean web with a variety of IPTV on-demand options available.
Also, it is possible for a pay TV provider, with no universal service obligations, to carve out a profitable market with an ‘internet-only’ strategy using linear IP backed up by on-demand and social web. A public service broadcaster with universal service obligations just can’t do this, and so have to resort to the current proposed BBC3 strategy which is to turn off the channel.
There is one other strategy which doesn’t seem to have been properly tabled – more effective cost management within the organisation to allow the BBC3 team breathing space to innovate. To anyone who has sat through a BBC3 meeting with 15 people and no decision makers, it can be painfully obvious that internet-first could and should be a cultural revolution, not a tech one. The groundbreaking internet innovation that BBC3 should be adopting therefore is ‘lean’ production not just IP distribution. A BBC3 pursuing an agile, ‘lean’ production system could probably get the channel on air for 2/3rds the existing budget, leaving space for innovation. I suspect that efficiency and cost reduction would have been the bits of an internet-first strategy that Reith would have latched onto while maintaining a broadcast heritage.
Nigel Walley @nwalley