As the streaming revolution continues to transform the way we consume TV, the BBC finds itself at a crossroads. Today’s release of the Media Nations UK report by Ofcom paints a stark picture of the challenges faced by traditional broadcasters in the age of Netflix and Disney+.
The rise of on-demand streaming services has not only shifted viewing habits but also ignited a contentious debate about the BBC’s primary funding mechanism – the TV Licence fee.
Ofcom’s report reveals a startling shift in viewing habits, with the shift towards on-demand content reshaping the television industry and putting the BBC’s funding model under the microscope.
Despite the BBC’s proactive efforts to adapt to this new landscape, the growth of its on-demand service, BBC iPlayer, has not been enough to counterbalance the decline in linear TV viewing, particularly among younger audiences.
As we delve deeper into Ofcom’s report and its implications, the debate around the TV Licence fee is set to intensify.
The Changing Landscape Of TV Consumption
According to the latest Media Nations UK report published by Ofcom today, the average amount of time individuals (aged 4+) spent watching any video content across all devices in 2022 was 4 hours 28 minutes per person per day.
The TV set remains the most-used device for watching video content, accounting for 82% of total video viewing, with live broadcast TV making up the largest proportion of this time.
Across all devices, live TV accounted for 44% of total video viewing in 2022, and, together with recorded playback and broadcaster video-on-demand (BVoD), all content from broadcasters accounted for 60% of total video viewing.
However, the report also reveals a significant shift in viewing habits.
Netflix is now the third most popular first destination among all individuals aged 4+, trailing behind only BBC One and ITV1.
This shift in viewing habits is significant, as it indicates a growing preference for on-demand content over traditional linear TV.
Despite the BBC’s efforts to adapt to this changing landscape, the growth of its on-demand service, BBC iPlayer, has not been enough to offset the decline in linear TV viewing.
Ofcom’s report reveals that while viewing to public broadcaster streaming services like BBC iPlayer has grown from 4% of total broadcaster viewing in 2017 to 10% in 2022, this growth has not compensated for the larger decline in viewing to broadcasters’ linear channels.
The BBC’s Actions: A Mixed Bag
In the face of the changing landscape of television consumption, the BBC has been proactive in its efforts to adapt and remain relevant.
In early July, the BBC published its Annual Report for 2022/23, where it claimed that the current collection method for the TV Licence fee is fair, effective, and good value for money.
The report also highlighted the BBC’s efforts to provide value for money by focusing expenditure on the programmes and services the public most want.
However, a closer look at Ofcom’s data reveals a more complex picture.
Despite an increase in public service content spend by 4% in their centenary year, totalling £3,078 million, the BBC’s net income from licence sales decreased by £59 million (1.6%) from the previous year.
This marked the first decrease in licence fee income since the reduction in 2019-20 due to the COVID-19 pandemic.
Ofcom’s report also highlights that the weekly reach of broadcast TV among all individuals has steadily declined, from 91% in 2017 to 79% in 2022.
The largest declines in weekly reach have been among 16-24-year-olds (from 82% in 2017 to 54% in 2022) and children aged 4-15 (from 87% in 2017 to 60% in 2022).
Conversely, weekly reach among those aged 65+ has remained consistently high; at 96% in 2022, there has been just a one-percentage-point decline over the last five years.
While BBC One continues to have the highest weekly reach of all TV channels (58%), this is 12 percentage points lower than in 2017.
This decline in reach, particularly among younger audiences, is a significant challenge for the BBC and raises questions about the relevance of the TV Licence fee, especially among those who primarily consume content through on-demand streaming services.
The TV Licence Fee: A Growing Resistance
The TV Licence fee, a mandatory payment for all UK households watching or recording live TV broadcasts or using BBC iPlayer, has been a subject of controversy and resistance in recent years (see our full guide on who needs to pay the TV Licence fee).
Ofcom’s report also provides some insights into the public sentiment towards public service broadcasting (PSB) and the changing consumption trends that may be influencing this resistance.
According to the report, audiences continue to be broadly satisfied with public service broadcasting. About seven in ten (69%) PSB viewers said they were satisfied with them.
In line with this, there has been a slight reduction in those stating they are dissatisfied with PSBs, down from 12% to 10%, driven largely by 16-34-year-olds (11% to 7%).
This demographic is also the one that has seen the largest decline in weekly reach of broadcast TV, from 82% in 2017 to 54% in 2022.
However, the report also reveals that Netflix is now the third most popular first destination among all individuals aged 4+, trailing behind only BBC One and ITV1.
As we recently reported, TV Licence fee evasion rates have hit their highest point since 1995.
The estimated evasion rate for 2022/23 reached 10.31%, up from 9.38% in the previous year. This is the first time since 1995 that the estimated rate of evasion has exceeded 10%.
This increase represents a significant loss in revenue for the BBC, with the estimated loss amounting to around £430 million.
The rise in the evasion rate is likely due to a combination of factors, with the most significant factor being the change in viewing habits.
With the rise of on-demand streaming services like Netflix, Disney+ and local ones like ITVX, people are watching fewer traditional TV programmes and less live TV.
This shift in behaviour has led to a decrease in the perceived value of a TV licence, prompting some people to evade the fee.
Ofcom’s report also highlights that the weekly reach of broadcast TV among all individuals has steadily declined, from 91% in 2017 to 79% in 2022.
This decline in reach, particularly among younger audiences, is a significant challenge for the BBC, with subscription-based streaming services slowly becoming the norm.
The Future Of The BBC And The TV Licence
The challenges faced by the BBC are significant. The rise of on-demand streaming services, coupled with the growing resistance to the TV Licence fee, poses a significant threat to the BBC’s primary funding mechanism.
However, it’s not all doom and gloom. Ofcom’s report also highlights some positive points about the BBC.
For instance, the BBC captures a greater proportion of their audiences on broadcaster’s streaming services (14%) compared to other broadcasters. Plus, the BBC is not just about TV – it also provides news, radio and the BBC website.
The BBC’s future will depend on its ability to adapt to the changing landscape of television consumption, demonstrate the value of the TV Licence, and effectively manage its resources.
As the landscape continues to evolve, the BBC will need to find innovative ways to remain relevant and financially viable.
