Agenda Introduction Findings -Overall value -Digital services -Genres -Subscription.

Agenda

IntroductionIntroduction

Findings

- Overall value

- Digital services

- Genres

- Subscription

The final study

• 2350 respondents

• Nationally representative

• Supplemented by qualitative research

• 19 pilots for development

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

Consumer Value Citizen Value= +

We started with willingness to pay

Gabor-Granger Conjoint

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

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

These methods allowed us to measure value on a top-down and bottom-up basis

Consumer Value Total Value

TOP DOWN

Gabor-Granger National Voting

BOTTOM UP

Non-normalised chip allocation

Non-normalised chip allocation

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

Overall findings

Top down(value of BBC as a whole)

Monthly total value of the BBC

(sum of consumer value and citizen value)

Monthly consumer value

of the BBC

£20.70£20.70 £18.35£18.35

£23.50£23.50 £18.70£18.70

Bottom-up(value of BBC calculated

as the sum of its constituent services)

Agenda

Introduction

Findings

- Overall valueOverall value

- Digital services

- Genres

- Subscription

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.

Proportion willing to pay £10:

Citizens:

Consumers:

81.0%

76.0%

81% of “total value respondents” think the BBC is worth the licence fee

92

81

60

42

19

96 4

92

76

53

32

16

63 2

Proportion willing to pay

0

10

20

30

40

50

60

70

80

90

100

5 10 15 20 30 40 50 60Monthly price (£)

% w

illi

ng

to

pay

Citizens

Consumers

On average people are willing to pay more than twice the current rate of the licence fee

Equivalent monthly fee:

Citizens:

Consumers:

Current Licence Fee:

£20.70

£18.35

£10.00

22,540,000

19,845,00014,700,000

10,290,000

4,655,000

2,205,000

1,470,000

980,000

22,540,00018,620,000

12,985,0007,840,000

3,920,000

1,470,000

735,000

490,000

Demand curve for the aggregate value of the BBC

0

10

20

30

40

50

60

70

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000

Number of UK households

Mo

nth

ly p

rice

(£)

Citizens Consumers

Current Licence Fee: £10 per month

There are two groups of non-payers

8% not WTP £5

19% NOT WTP £10

11% WTP £5 but NOT £10

Citizens NOT willing to pay:

£5 £100%

5%

10%

15%

20%

25%

8% not WTP £5

16% WTP £5 but NOT £10

24% NOT WTP £10

Consumers NOT willing to pay:

£5 £100%

5%

10%

15%

20%

25%

Those willing to pay £5 but not £10 tend to be multichannel families

Age:Middle-aged(30-49 skew)

Gender: Male

SEG:Less well-off (C2DE Skew)

Region:Skew to Wales & NI

MC Access:

With multichannel

Citizens and Consumers NOT willing to pay £10

19% NOT WTP £10

11% WTP £5 but NOT £10

Citizens Consumers

16% WTP £5 but NOT £10

24% NOT WTP £10

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

The 8% who are “Refuseniks” tend to be male, downmarket and more likely to live in Scotland and Northern Ireland

Age:Older(50-64 skew)

Gender: Male

SEG:Less well-off (DE Skew)

Region: Skew to Scotland

MC Access:

Without multichannel

Citizens and Consumers NOT willing to pay £5

Citizens

8% not WTP £5

Consumers

8% not WTP £5

Age: 30-64

Gender: Male

SEG:Less well-off (DE Skew)

Region:Skew to Scotland & NI

MC Access:

Without multichannel

Agenda

Introduction

Findings

- Overall value

- Digital servicesDigital services

- Genres

- Subscription

Finding 2

The BBC’s digital services are

valued very highly.

BBC’s digital services are valued highly

BBCi (online and interactive)BBC Local RadioBBC Digital Radio

BBC National Analogue Radio

BBC Digital TV Channels

BBC Two

BBC One

Value of BBC services for citizens and consumers

£ per month

Citizens Consumers0

5

10

15

20

25

5.70

4.00

3.90

3.60

1.80

2.70

1.80

Total = £23.50

5.40

3.50

3.20

2.70

1.201.701.00

Total = £18.70

Current Licence Fee:

£10 per month

5.70

4.00

3.90

3.60

1.80

2.70

1.80

3.36

3.50

3.20

2.70

1.20

1.70

1.00

1.45

0.90

0.99

0.61

0.40

5.40

The digital services when compared to their costs deliver high value

BBC Digital Radio

0.00 1.00 2.00 3.00 4.00 5.00 6.00£ per month

Value of BBC services compared to costs

Citizens Consumers Cost of delivering service

BBC National Analogue Radio

BBC One

BBC Two

BBC Digital TV Channels

BBC Local Radio

BBCi

The low cost base of the digital television channels mean that they generate a high value yield

0.63

0.66

0.63

0.45

0.50

0.77

0.80

0.77

0.55

0.61

0.32

0.17

0.11

0.18*

0.18*

Individual service values compared to costs

£ per month0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90

*Combined cost for children’s channels (CBBC and Cbeebies)

Citizens Consumers Cost of delivering service

BBC News 24

Cbeebies

CBBC

BBC Four

BBC Three

Agenda

Introduction

Findings

- Overall value

- Digital services

- GenresGenres

- Subscription

Finding 3

News, soaps, British drama and

British comedy are all perceived to

be important public service genres

News, regional news and home-produced programmes were genres that were ranked most important

11.5

12.0

12.2

12.7

13.3

14.5

14.5

15.1

24.7

28.4

“Total value” respondentsGenre ranking

British Films

Football

British Comedy

Consumer programmes

Education

Soaps

Current affairs

Wildlife

Regional News

News

Average ranking score(out of 38)

0 305 10 15 20 25

11.9

12.7

13.9

14.0

14.4

14.6

15.3

17.9

19.6

22.1

“Consumer value” respondentsGenre ranking

News

Football

British Drama

British Films

US Films

Wildlife

British Comedy

Blockbuster Movies

Soaps

Regional News

Average ranking score(out of 38)

0 305 10 15 20 25

The high correlation between both groups shows that public service can include a wider variety of genres

Comparison of ranking scores between citizens and consumers

Cit

izen

ran

kin

g s

core

of

mo

st i

mp

ort

ant

Children’s Live Action

Consumer ranking score of most important

Observational documentaryForeign Films

US Films

British Films

Consumer programmes

Investigative programmes

Art house / independent films

Blockbuster Movies

Chat shows

Children’s Animation

Religion

Classical music Popular music programmes

Football

Sport

Home & DIYFood & Cookery

Gardening

US Comedy

British Comedy

Business

Education

Arts

Science

Wildlife

History

Period Drama

US Drama

British Drama

Reality TV programmes

Soaps

Quiz ShowsPolitics

Current affairs

Other local programmes

Regional News

News

0.00

5.00

10.00

15.00

20.00

25.00

30.00

0.00 5.00 10.00 15.00 20.00 25.00 30.00

Agenda

Introduction

Findings

- Overall value

- Digital services

- Genres

- SubscriptionSubscription

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

Currently the BBC generates a consumer surplus of over £2.5 billion

Consumer surplus

5 10 15 20 25

Number of UK households (millions)

0

10

20

30

40

50

60

70

0

Mo

nth

ly P

rice

(£)

Current LicenceFee: £10 per month

A

B

Annual net consumersurplus: £2,597m

Annual consumer deficit:£303.6m

The BBC would need to charge £13 per month if it were a subscription service to maximise its revenues

Amount of income earned if BBC werea subscription service

10 20 30 40 50 60 70Monthly price (£)

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

Income (£)

Current BBC Income (£2.9 billion)

Equivalent monthly fee:

Revenue Maximising Price:

Income:

Number of HHs at £13:

Drop in Income at

Maximising Price:

£13.00

£2.37bn

15.2m

£522.7m

At £13 per month the welfare loss would be £300m

Net consumer welfare

5 10 15 20 25

Number of UK households (millions)

0

10

20

30

40

50

60

70

0

Mo

nth

ly P

rice

(£)

BDC

-£532.8m -£70.8m

Current Licence Fee: £10 per month

Optimal subscription price: £13 per month

£303.6m

If the BBC were to offer different subscription packages 58% of households would opt out entirely

Service Service packagepackage

Monthly Monthly subscription subscription

price price

Percentage of Percentage of consumers consumers who would who would subscribe subscribe

Number of Number of households households

Annual Annual revenue 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

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

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