The BBC is struggling to compete with Netflix because it cannot afford the salaries of the tech workers needed to create online services, according to the UK’s public spending watchdog.
While commercial streaming companies can deliver high-quality personalized recommendations to viewers, the BBC’s technology lags behind the competition. As a result, the corporation cannot tell the difference between a sports fan who is interested in football and one who is interested in cricket – meaning it struggles to provide relevant content to users.
The director general of the BBC, Tim Davey, has set out plans to become the first digital broadcaster in the coming decades, with traditional TV and radio channels slowly phased out in favor of delivering all content over the internet.
But its online products are not up to the challenge, according to the National Audit Office, in part because of stiff competition for tech workers and years of funding cuts. While Netflix budgets £1.7bn a year for the technology that underpins its global streaming platform, the BBC’s spending on digital development has fallen to £98m.
The National Audit Office’s report describes a BBC that has a clear vision of how it wants to move to a digital future, but often lacks the money needed for this transformation and is hampered by the need to maintain its existing TV and radio channels.
“The BBC seeks to attract the same audience as other media providers and has significantly lower funding to develop its digital products,” he concludes.
Eighty-eight percent of all time spent on BBC services is in the form of people watching television or listening to radio services. This risks dooming the BBC to cater to an older audience, with Netflix more than twice as popular as iPlayer among 16- to 34-year-olds. The BBC’s own market research found that iPlayer and Sounds were less easy to use than equivalent commercial services such as Netflix or Spotify.
BBC funding has been cut repeatedly over the past 12 years of Conservative-led governments. Earlier this year, Nadine Dorries decided to freeze the license fee for the next two years, leaving the broadcaster to face another real cut in its income. This means that if the BBC is to increase its investment in digital services, then that money must be found by cutting budgets elsewhere – with hundreds of cuts to traditional broadcast channels announced in recent months.
Despite Davey’s recent announcement that the BBC would prepare for a world without broadcast TV and radio, the NAO found that it had done only limited work on what this would mean in practice.
The challenge is visible in the state of the BBC’s iPlayer service. When it launched in 2007, it was considered a pioneer and helped popularize the entire concept of streaming TV programs. Netflix boss Reed Hastings even credited him for paving the way for his service. Yet iPlayer has since been overtaken technologically and until recently regulations imposed by media regulator Ofcom meant the BBC was limited in its ability to upload archive programmes.
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Relatively low pay at the broadcaster – and fierce competition for skilled technical workers from other businesses – also means there is high turnover among the BBC’s technical staff and it struggles to create the products it needs to attract a younger audience.
A BBC spokesman said: “The NAO finds the BBC’s digital performance to be impressive with more people coming to iPlayer, Sounds and our online services than ever before, but there is more to do. We are driving digital reforms across the organization to give people the BBC content they want, in the ways they want it.”
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