thickett

Measuring Success at the BBC: 

Measuring Success at the BBC James Thickett Controller – Business Strategy, BBC 21st June 2004

Measuring Success at the BBC : 

Measuring Success at the BBC Measuring the impact of broadcasting in the UK Why is the BBC different? Measuring success at the BBC

Slide3: 

Measuring the impact of broadcasting in the UK

Broadcasting’s role in people’s lives is much bigger than it’s economic significance: 

Broadcasting’s role in people’s lives is much bigger than it’s economic significance Source: WWP Media imperatives

Consumption of television, radio and online vastly outstrips other leisure activities : 

Consumption of television, radio and online vastly outstrips other leisure activities Source: Screen Digest/ABN Ambro

… and revenues generated by broadcasting are modest by comparisons with other markets: 

… and revenues generated by broadcasting are modest by comparisons with other markets £ billions Source: Screen Digest/ABN Ambro/Zenith

Measuring the impact of commercial broadcasters is relatively straightforward : 

Measuring the impact of commercial broadcasters is relatively straightforward £3.2 bn £2.5 bn £0.36 bn £0.2 bn £1.66 bn £1.46 bn £0.1 bn Subscriptions Advertising Other Source:Zenith/Broker Reports

Slide8: 

Why is the BBC different?

Last year the BBC raised nearly £3 billion in revenue but this is not a useful indicator of value: 

Last year the BBC raised nearly £3 billion in revenue but this is not a useful indicator of value The majority of BBC Revenues accrue from the licence fee – a compulsory tax levied on all households with television sets The licence fee is set by government – not by consumer demand The licence fee is non-discriminatory – bears no relation to consumption of services or ability to pay

Even if the BBC was funded differently, its unique remit would create significant measurement problems : 

Even if the BBC was funded differently, its unique remit would create significant measurement problems Reithian purposes – to “inform, educate and entertain” Delivering value to citizens as well as individuals Democratic value Cultural value Educational value Social value Global value These deliver “externalities” which are hard to measure

ITV measures it’s public service remit by estimating forgone revenues: 

ITV measures it’s public service remit by estimating forgone revenues ITV Public service programmes Regional news South Bank Show Tonight with Trevor McDonald Real Crime Jonathan Dimbleby Prince William at 21 My Favourite Hymns £2.0bn £ 0.4bn £1.6bn Foregone revenues for showing public service content Actual Revenues

Slide12: 

Measuring Success at the BBC

Two possible approaches to measuring success at the BBC : 

Two possible approaches to measuring success at the BBC Revealed preference – how much people actually consume Stated preference – what they actually value

Every week 93% of the UK population engage with BBC services: 

Every week 93% of the UK population engage with BBC services Weekly Reach (%) 2004 Source: TV - BARB age 4+, 15 minute weekly reach, Radio - RAJAR age 15+. Data for 2003 unless otherwise stated. * Television and radio only. **In digital only homes. ^ In online homes (monthly reach).

…and the BBC accounts for 43% of all television and radio consumption: 

…and the BBC accounts for 43% of all television and radio consumption Every week the average person spends 11 hours watching BBC Television programmes and 12 hours listening to BBC radio Weekly hours consumed Source:BARB/RAJAR estimates 38% 53%

…but problems with revealed preference measures : 

…but problems with revealed preference measures Reach and share measures difficult to put a value on – there is no common currency in the industry Consumption does not tell us about the quality of experience people get Broadcasting is an imperfect market – what people consume is not necessarily an indicator of what is valuable How do we quantify market externalities?

Stated preference research shows that people hugely value the BBC : 

Stated preference research shows that people hugely value the BBC % agreeing with the statements Source:TNS

…and they clearly rate BBC services highly: 

The BBC is judged to have the best quality of programmes in 18 out of 22 genres News Soaps Wildlife British Comedy Drama Sport History Home and DIY Current Affairs Gardening Science Food Period Drama Education Arts Religion Business Chatshows …and they clearly rate BBC services highly The BBC is judged to have the best range of programmes in 17 out of 22 genres News Wildlife British Comedy Drama Sport History Home and DIY Current Affairs Gardening Science Food Period Drama Education Arts Religion Business Chatshows Source: TNS

We can get some clues around value: 

We can get some clues around value % agreeing with the statements Source:TNS

The missing link: understanding the real value people place on the BBC : 

The missing link: understanding the real value people place on the BBC Previous research on “Willingness to Pay” Home office study 1987 Ehrenberg – Mills (LBS, 1990) Radio-communications Agency/DTI (2000) Other studies into Broadcaster Value RTE (Ireland, 2003) CBC (Canada, 2000) Australian Bureau of Statistics (2000)

BBC value research : 

BBC value research Commissioned by the BBC with Human Capital and Martin Hamblin GFK: Dec 2003 – May 2004 2,200 face to face interviews and 1,000 by telephone 1,000 telephone interviews 19 pilots! Mix of methodologies, including Gabor-Granger, Conjoint Analysis, Ranking Tests and Personal Preference Allocation Study drew on significant consultations with Ofcom and LBS

BBC value research – key questions : 

BBC value research – key questions How much would people be prepared to pay for the BBC? As a subscription service? To avoid it closing down? If the BBC were a subscription service, how much would we need to charge? How much do people value different BBC services? Which types of programme do people value most?

How much would people pay for the BBC? : 

How much would people pay for the BBC? How much would you pay for the BBC if it was only available as a subscription service? Equivalent monthly fee: Consumers £18.35 Current Licence Fee: £10.00 22,540,000 18,620,000 12,985,000 7,840,000 3,920,000 1,470,000 735,000 490,000 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 Number of UK households Monthly Price (£) Consumers Current Licence Fee: £10 per month 5

As a subscription service, over 8m people would lose out: 

As a subscription service, over 8m people would lose out Income Against Price Equivalent monthly fee: Revenue Maximising Price: Income: Number of HHs at £13: Drop in Income at Maximising Price £13.00 £2.37 billion 15.2 million £600 million Current Licence Fee: £10.00 0 500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 0 10 Monthly Price (£) Income (£) Current BBC licence fee Income (£2.9 billion) 70 60 50 40 30 20 £13

How much would people pay for the BBC? : 

How much would people pay for the BBC? In a national vote on the BBC, how much would you pay to avoid the BBC closing down? Equivalent monthly fee: Citizens: Consumers £20.70 £18.35 Current Licence Fee: £10.00 22,540,000 19,845,000 14,700,000 10,290,000 4,655,000 2,205,000 1,470,000 980,000 22,540,000 18,620,000 12,985,000 7,840,000 3,920,000 1,470,000 735,000 490,000 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 Number of UK households Monthly Price (£) Citizens Consumers Current Licence Fee: £10 per month 5

Over 80% would be happy to pay the current licence fee to keep the BBC: 

Over 80% would be happy to pay the current licence fee to keep the BBC How much would people be willing to pay for the BBC to avoid it closing down? Those agreeing at different prices Source: Martin Hamblin – GFK 2004 % willing to pay

The BBC generates a net consumer surplus of over £3 billion: 

The BBC generates a net consumer surplus of over £3 billion Calculating the BBC’s net consumer surplus (Consumer surplus minus consumer deficit) £ Millions Net consumer surplus 3,080 2,800 Source: Martin Hamblin – GFK 2004

Scotland and Northern Ireland show lower willingness to pay: 

Scotland and Northern Ireland show lower willingness to pay

How much do people value the BBC’s services?: 

How much do people value the BBC’s services? £ per month BBC website/interactive BBC Local Radio BBC Digital Radio BBC National Radio BBC Digital TV Channels BBC Two BBC One 5.70 5.40 4.00 3.50 3.90 3.20 3.60 2.70 1.80 1.20 2.70 1.70 1.80 1.00 0 5 10 15 20 25 Citizens (value for whole country) Consumers (value to individual) Total = £23.50 Total = £18.70

Willingness to pay for BBC services compared with licence fee cost of providing them: 

Willingness to pay for BBC services compared with licence fee cost of providing them BBC ONE BBC TWO BBC Analogue Radio BBC Digital TV BBC Local Radio Source:Human capital/Martin Hamblin – GFK 2004. BBC Online/interactive Willingness to pay as consumers Licence fee cost of service Uplift for value to society For comparison: average Sky subscription package costs £25 per month £ Per month, per household

Slide31: 

People place high value on BBC digital services BBC THREE BBC FOUR News 24 CBBC/CBeebies Source: A study measuring the value of the BBC: Human Capital/Martin Hamblin – GFK 2004 Willingness to pay as consumers Cost of delivering service Citizen uplift The willingness to pay for BBC digital services vs licence fee cost of providing them Per month, per household

Which type of programmes do people value most?: 

Which type of programmes do people value most? Score 1. News 2. Regional News 3. Soaps 4. Blockbuster Movies 5. British Comedy 6. Wildlife 7. British Drama Source: Martin Hamblin – GFK 2004 ‘Please rank programmes in order of those you most prefer to watch’ 8. Sport 9. Home & DIY 10. Chat Shows

Which type of programmes are most important for the country as a whole?: 

Which type of programmes are most important for the country as a whole? Score Source: Martin Hamblin – GFK 2004 Ranking based on ‘citizens’ preferences 1. News 2. Regional News 3. Wildlife 4. Current Affairs 5. Soaps 6. Consumer Programmes 7. Education 8. British Comedy 9. Blockbuster Movies 10. Sport

Slide34: 

Which type of programmes do people value least? Score Source: Martin Hamblin – GFK 2004 Ranking based on ‘consumer’ preferences 1. US Drama 2. Fly-on-Wall 3. Education 4. Classical Music 5. Cartoons 6. Politics 7. Art House Films 8. Arts 9. Business 10. Religion

Which type of programmes are least important for the country as a whole?: 

Which type of programmes are least important for the country as a whole? Score Source: Martin Hamblin – GFK 2004 Ranking based on ‘citizens’ preferences 1. Popular Music 2. Classical Music 3. Arts 4. Reality TV 5. Business 6. Cartoons 7. US Drama 8. Fly-on-Wall 9. Religion 10. Art House Films

Scatter plot of Citizens vs Consumers : 

Citizens vs Consumers of Ranking Scores Observational documentary Foreign Films US Films British Films Consumer programmes Investigative programmes Art house/ independent films Blockbuster Movies Chat shows Children’s Animation Children’s Live Action Religion Classical music Popular music programmes Football Sport Home & DIY Food & Cookery Gardening US Comedy British Comedy Business Education Arts Science Wildlife History Period Drama US Drama British Drama Reality TV programmes Soaps Quiz Shows Politics Current affairs Other local programmes Regional News News 0 5 10 15 20 25 30 0 5 10 15 20 25 Consumer Ranking Score of Most Important Citizen Ranking Score of Most Important Scatter plot of Citizens vs Consumers Public Service Essential to citizens & consumers Important to both citizens/ consumers Consumer led

Some Conclusions: 

Some Conclusions It is possible to assess people’s value of the BBC in purely monetary terms People place a rough value on the BBC which is double the amount they are currently paying through the licence fee. People value the BBC even more when they consider its role as a public organisation serving everyone

Some Conclusions: 

Some Conclusions However 19% would still choose not to pay the current licence fee …and there are significant regional variations The aggregated value people attach to individual BBC services significantly exceeds the value they attach to the organisation as a whole.

Some Conclusions: 

Some Conclusions People value digital services more highly than analogue, in proportion to the cost of providing those services Broadcasting’s role in providing News is crucial The genres people value as consumers are largely consistent with those they value as citizens, and reflect the core strengths of the BBC

Measuring Success at the BBC: 

Measuring Success at the BBC James Thickett Controller – Business Strategy, BBC Presentation at the British Library 21st June 2004