The BBC is struggling to compete with Netflix because it cannot afford the salaries of tech workers required to create online services, according to the UK’s public spending watchdog.
While commercial streaming companies can provide high-quality personalised recommendations to viewers, the BBC’s technology is lagging behind the competition. As a result, the corporation cannot tell the difference between a sport fan who is interested in football and one who is interested in cricket – meaning it struggles to serve up relevant content to users.
The BBC director general, Tim Davie, has set out plans to become a digital-first broadcaster over the coming decades, with traditional television and radio channels slowly being switched off in favour of providing all content through the internet.
However, its online products are not up to the challenge, according to the National Audit Office, in part because of strong competition for tech workers and years of funding cuts. While Netflix is budgeting £1.7bn a year on the technology that underpins its global streaming platform, the BBC’s spending on digital product development has declined to £98m.
The report by the National Audit Office describes a BBC that has a clear vision of how it wants to shift to a digital-first future – but often lacks the money required for this transformation and is hamstrung by needing to maintain its existing television and radio channels.
“The BBC is seeking to attract the same audience as other media providers and has significantly lower funding for developing its digital products,” it concluded.
Eighty-eight per cent of all time spent with BBC services is in the form of people watching television or listening to radio services. This risks dooming the BBC to catering for an older audience, with Netflix more than twice as popular as iPlayer among 16- to 34-year-olds. The BBC’s own market research has found both iPlayer and Sounds are less easy to use than equivalent commercial services such as Netflix or Spotify.
The BBC’s funding has been cut repeatedly during the past 12 years of Conservative-led governments. Earlier this year, Nadine Dorries decided to freeze the licence fee for the next two years, leaving the broadcaster facing another real-terms reduction in its income. This means that if the BBC wants to increase its investment in digital services then this money has to found by cutting budgets elsewhere – with hundreds of redundancies on traditional broadcast channels announced in recent months.
Despite Davie’s recent announcement that the BBC would prepare for a world without broadcast radio television and radio, the NAO found it has carried out only limited work on what this would mean in practice.
The challenge is seen in the state of the BBC’s iPlayer service. When it launched in 2007, it was considered pioneering and helped to popularise the entire concept of streaming television programmes. Netflix’s boss, Reed Hastings, even credited it with preparing the ground for his service. Yet iPlayer has since been overtaken technologically and until recently regulations imposed by the media regulator Ofcom meant the BBC was restricted in its ability to upload archive programmes.
Comparatively low pay at the broadcaster – and fierce competition for skilled tech workers from other businesses – also mean there is high staff turnover among the BBC’s tech staff and it struggles to build the products required to attract younger audience.
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 organisation to provide people with the BBC content they want, in the ways they want it.”
