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Agenda

Agenda. Introduction Findings Overall value Digital services Genres Subscription. The final study. 2350 respondents Nationally representative Supplemented by qualitative research 19 pilots for development. Consumer Value. Citizen Value. =. +.

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Agenda

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  1. Agenda • Introduction • Findings • Overall value • Digital services • Genres • Subscription

  2. The final study • 2350 respondents • Nationally representative • Supplemented by qualitative research • 19 pilots for development

  3. Consumer Value Citizen Value = + The aim was to measure the value of the BBC for people as individuals and the country as a whole Total Value of the BBC

  4. We started with willingness to pay Gabor-Granger Conjoint

  5. Willingness to pay has several limitations • Not the most appropriate performance indicator for the BBC • Useful for Sky • It doesn’t capture the externalities • There are research effects • Respondents don’t believe that the BBC will be taken away • They resent the idea that the BBC will be taken away • They think they pay for it through Sky anyway

  6. So what other performance indicators are useful? • Non-normalised chip allocation • Perhaps less dependent on affluence • Can be used to estimate value to individuals or society as a whole • National Voting question • Addresses respondents as democratic agents • Captures perceived externalities

  7. Consumer Value Total Value Gabor-Granger National Voting TOP DOWN Non-normalised chip allocation Non-normalised chip allocation BOTTOM UP These methods allowed us to measure value on a top-down and bottom-up basis

  8. Top-down and bottom-up methods have these pros and cons • The top-down method shows how people really would react: • as democratic agents when policy has changed or • as consumers if the BBC were offered as a subscription service • But it may not capture the full value that people derive from the BBC’s services • The bottom-up method removes any gap that might exist because of a lack of awareness

  9. Monthly total value of the BBC(sum of consumer value and citizen value) Monthly consumer value of the BBC Top down(value of BBC as a whole) £20.70 £18.35 Bottom-up (value of BBC calculated as the sum of its constituent services) £23.50 £18.70 Overall findings

  10. Agenda • Introduction • Findings • Overall value • Digital services • Genres • Subscription

  11. Finding 1 There is overwhelming support for the licence fee. 81% of the population think the BBC is worth its current cost and on average people think it is worth twice what they pay.

  12. Proportion willing to pay 100 Citizens 92 92 90 Consumers 81 Proportion willing to pay £10: 80 76 70 Citizens: Consumers: 81.0% 76.0% 60 60 53 % willing to pay 50 42 40 32 30 19 16 20 9 6 6 10 4 3 2 0 5 10 15 20 30 40 50 60 Monthly price (£) 81% of “total value respondents” think the BBC is worth the licence fee

  13. Demand curve for the aggregate value of the BBC Citizens Consumers 70 60 Equivalent monthly fee: 980,000 490,000 Citizens: Consumers: Current Licence Fee: £20.70 £18.35 £10.00 1,470,000 50 735,000 Monthly price (£) 2,205,000 40 1,470,000 4,655,000 30 3,920,000 10,290,000 20 14,700,000 7,840,000 12,985,000 19,845,000 10 22,540,000 18,620,000 22,540,000 0 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 Number of UK households On average people are willing to pay more than twice the current rate of the licence fee Current Licence Fee: £10 per month

  14. Citizens NOT willing to pay: Consumers NOT willing to pay: 25% 25% 24% NOT WTP £10 19% NOT WTP £10 20% 20% 16% WTP £5 but NOT £10 15% 15% 11% WTP £5 but NOT £10 10% 10% 8% not WTP £5 8% not WTP £5 5% 5% 0% 0% £5 £10 £5 £10 There are two groups of non-payers

  15. Citizens and Consumers NOT willing to pay £10 24% NOT WTP £10 Age: Middle-aged (30-49 skew) 19% NOT WTP £10 Gender: Male 16% WTP £5 but NOT £10 SEG: Less well-off (C2DE Skew) 11% WTP £5 but NOT £10 Region: Skew to Wales & NI MC Access: With multichannel Citizens Consumers Age: Middle-aged (30-49 skew) Gender: No gender skew SEG: Less well-off (C2DE Skew) Region: Skew to Scotland & NI MC Access: With multichannel Those willing to pay £5 but not £10 tend to be multichannel families

  16. Citizens and Consumers NOT willing to pay £5 Age: Older (50-64 skew) Gender: Male SEG: Less well-off (DE Skew) 8% not WTP £5 8% not WTP £5 Region: Skew to Scotland MC Access: Without multichannel Citizens Consumers Age: 30-64 Gender: Male SEG: Less well-off (DE Skew) Region: Skew to Scotland & NI MC Access: Without multichannel The 8% who are “Refuseniks” tend to be male, downmarket and more likely to live in Scotland and Northern Ireland

  17. Agenda • Introduction • Findings • Overall value • Digital services • Genres • Subscription

  18. Finding 2 The BBC’s digital services are valued very highly.

  19. Value of BBC services for citizens and consumers 25 £ per month Total = £23.50 1.80 2.70 20 Total = £18.70 1.00 BBCi (online and interactive) 1.80 1.70 BBC Local Radio 3.60 1.20 BBC Digital Radio 15 2.70 BBC National Analogue Radio 3.90 Current Licence Fee: £10 per month 3.20 BBC Digital TV Channels 10 4.00 3.50 BBC Two 5 5.70 5.40 BBC One 0 Citizens Consumers BBC’s digital services are valued highly

  20. Value of BBC services compared to costs Citizens Consumers Cost of delivering service 5.70 BBC One 3.36 5.40 4.00 BBC Two 1.45 3.50 BBC Digital TV Channels 3.90 0.90 3.20 BBC National Analogue Radio 3.60 0.99 2.70 1.80 BBC Digital Radio 1.20 2.70 BBC Local Radio 0.61 1.70 1.80 BBCi 0.40 1.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00 £ per month The digital services when compared to their costs deliver high value

  21. Individual service values compared to costs Citizens Consumers Cost of delivering service 0.61 BBC Three 0.32 0.50 0.55 BBC Four 0.17 0.45 0.77 CBBC 0.18* 0.63 0.80 Cbeebies 0.18* 0.66 0.77 BBC News 24 0.11 0.63 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 £ per month * Combined cost for children’s channels (CBBC and Cbeebies) The low cost base of the digital television channels mean that they generate a high value yield

  22. Agenda • Introduction • Findings • Overall value • Digital services • Genres • Subscription

  23. Finding 3 News, soaps, British drama and British comedy are all perceived to be important public service genres

  24. “Total value” respondents Genre ranking “Consumer value” respondents Genre ranking News 22.1 28.4 News Regional News 19.6 Regional News 24.7 Wildlife 17.9 15.1 Soaps Current affairs 15.3 Blockbuster Movies 14.5 14.6 Soaps 14.5 British Comedy Education 14.4 Wildlife 13.3 Consumer programmes 14.0 12.7 US Films 13.9 British Comedy British Films 12.2 12.7 Football 12.0 British Drama 11.9 British Films 11.5 Football 0 5 10 15 20 25 30 0 5 10 15 20 25 30 Average ranking score(out of 38) Average ranking score(out of 38) News, regional news and home-produced programmes were genres that were ranked most important

  25. Comparison of ranking scores between citizens and consumers 30.00 News 25.00 Regional News 20.00 Wildlife Citizen ranking score of most important Current affairs 15.00 Soaps Education Consumer programmes Football British Comedy British Films History Science Sport Other local programmes Blockbuster Movies 10.00 British Drama US Films Gardening Investigative programmes Period Drama Home & DIY Chat shows Politics Food & Cookery Quiz Shows Classical music US Comedy Arts Children’s Animation Popular music programmes Business 5.00 Reality TV programmes Religion US Drama Observational documentary Children’s Live Action Foreign Films Art house / independent films 0.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 Consumer ranking score of most important The high correlation between both groups shows that public service can include a wider variety of genres

  26. Agenda • Introduction • Findings • Overall value • Digital services • Genres • Subscription

  27. Finding 4 Subscription would have adverse effects on both the BBC and its audience, with an annual net welfare loss of around £300 million, a revenue loss of over £500 million and a loss of its ability to deliver public purposes

  28. Consumer surplus 70 60 50 Annual net consumersurplus: £2,597m 40 Monthly Price (£) Annual consumer deficit:£303.6m 30 20 10 Current LicenceFee: £10 per month 0 0 5 10 15 20 25 Number of UK households (millions) Currently the BBC generates a consumer surplus of over £2.5 billion A B

  29. Amount of income earned if BBC werea subscription service Income (£) 3,000,000,000 Current BBC Income (£2.9 billion) 2,500,000,000 2,000,000,000 Equivalent monthly fee: Revenue Maximising Price: Income: Number of HHs at £13: Drop in Income atMaximising Price: £13.00 £2.37bn 15.2m £522.7m 1,500,000,000 1,000,000,000 500,000,000 0 0 10 20 30 40 50 60 70 Monthly price (£) The BBC would need to charge £13 per month if it were a subscription service to maximise its revenues

  30. Net consumer welfare 70 60 50 40 -£532.8m -£70.8m £303.6m Monthly Price (£) 30 Optimal subscription price: £13 per month 20 10 Current Licence Fee: £10 per month C D 0 0 5 10 15 20 25 Number of UK households (millions) At £13 per month the welfare loss would be £300m B

  31. Service package Monthly subscription price Percentage of consumers who would subscribe Number of households Annual revenue BBC One £7 4% 0.9m £75m BBC One + BBC Two £9 17% 4.1m £438m BBC One + BBC Two + BBC digital channels £11 22% 5.5m £719m Opt out of all packages N/A 58% 14m N/A TOTAL N/A 100% 24.5m £1,232m If the BBC were to offer different subscription packages 58% of households would opt out entirely

  32. Conclusions • Willingness to pay has a role but doesn’t give the complete story • The national voting question is a useful addition • On this occasion we could not find a way to make conjoint work • All the methods we used converged on roughly the same answer

  33. Conclusions • There is overwhelming support for the Licence Fee • The BBC’s digital services are valued very highly • Subscription would have an adverse impact on citizens, consumers and the BBC’s finances • News, soaps, British drama and British comedy are all perceived to be important PSB genres

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