BBC management wants to prepare for a digital-first future but they’re hard-pressed to compete against tech giants like Netflix.
Netflix spends £1.7 billion per year on technology alone to keep the OTT platform running as well as it does. BBC’s budget for technology that runs underneath its internet-based broadcast platform was £98 million in 2022. These figures show how far behind BBC is in the race for dominance in the OTT market. BBC still spends 88% of its resources on the television and radio broadcasting infrastructure. So, while Tim Davie, the director general of BBC, has announced their long-term plan to switch the radio and television-based services to internet-based services completely, very little work has actually gone into it.
When BBC first launched the internet-based iPlayer, it was pioneering. So much so that Reed Hastings, the CEO of Netflix actually credits BBC with laying the foundation for a service like Netflix. Over the years the British Broadcasting Corporation has struggled to keep up technologically with players like Netflix and Spotify. The nationalized company just doesn’t have the resources to compete.
What really makes the difference between the BBC and Netflix is their capability to offer a personalized experience to their audience. Netflix has poured money into analytical research. It currently runs one of the most sophisticated data science operations just to understand what a particular member of the audience wants to watch. The recommendation engines take a lot of things into account and nail it pretty much every time. iPlayer does not know how to differentiate between a person who likes thrillers and a person who likes sports.
What Netflix has achieved takes a lot of technological prowess Same goes for Spotify. These companies have hired and retained the best technical talent and they will keep doing that in the future because they can afford it and they depend on it. BBC cannot afford to pay highly skilled technology professionals who can bring its OTT game up to the level that the young audiences are used to. The result is quite obvious. Netflix and Spotify are twice as popular as iPlayer or Sounds. BBC has completely failed to penetrate the age group of 16-34, the main body of the OTT audience.
Being a company funded by the state, BBC does not have access to the millions it needs to survive the disruptive market. The corporation has endured fund cut after fund cut over the last 12 years of conservative governments. The latest blow was sustained when Nadine Dorries put a freeze on the license fee for two years earlier in 2022. At this rate, BBC might be stuck to entertaining only an older audience and then, slowly move towards obsoletion.
A BBC spokesperson said: “The NAO finds the BBC’s digital performance is impressive with more people coming to iPlayer, Sounds, and our online services than ever before, but there is more to do. We’re driving digital reforms across the organization to provide people with the BBC content they want, in the ways they want it.”
Whether they will manage to assemble the resources needed for such reforms is a different question altogether.