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Ofcom calls on UK PSBs to ‘collaborate to compete’ in digital age

The UK’s public service broadcasters (PSBs) will increasingly need to collaborate in order to compete in an age of changing viewing habits and large digital rivals like Netflix and Amazon, according to Ofcom.

Ofcom CEO Sharon White

Speaking at Deloitte and Enders Analysis’ ‘Media and Telecoms 2018 & Beyond’ conference in London yesterday, Ofcom CEO Sharon White called on the PSBs to adapt for the digital age, to invest in new methods of distribution and to find fresh ways to reach younger people who are “turning away from traditional TV”.

She said that PSBs can up programme exports by striking more co-production deals, backed by the global reputation of the UK’s creative industries, and urged broadcasters to work with the major global digital platforms.

“By working with the likes of Facebook, YouTube, Netflix, Amazon and Apple, PSBs can benefit from these companies’ immense global reach. They may look to share expertise in technology, marketing and programme-making, in return for investment or prominence on digital platforms,” said White.

“Our PSBs may increasingly need to join forces to increase their bargaining power, just as they are doing with TV manufacturers. Increasingly, they will need to collaborate to compete. We will take account of that need when assessing competition in the market.”

In terms of innovation, White said that the BBC is rightly looking to develop its iPlayer catch-up service, but also said that “the world is moving on” and warned that if the BBC is to remain relevant “it also needs to reach audiences wherever they are, in ways that are convenient for them. That means fair and flexible access to its content.”

“The PSBs will inevitably have to partner with their competitors, finding common ground to navigate the changing landscape together,” said White. “These are some of the ways our PSBs can expand the routes and partnerships that allow their content to be seen by the greatest number of people – on smart TVs, phones and digital devices.”

Pay TV broadcaster Sky and Liberty Global-owned cable operator Virgin Media have long sought to make BBC content searchable via their own advanced TV services outside the iPlayer environment. Sky in particular wants to make BBC shows available directly via its Sky Q platform.

The comments came as the TV industry continues to undergo a period of great change. White said eight in ten UK adults now use catch-up TV to binge on box sets, with superfast WiFi and 4G mobile revolutionising the way that people access content.

According to other Ofcom findings, which White referenced in her speech, children are watching a third less TV than they did at the start of the decade and teens are now more familiar with the YouTube brand than they are with the BBC brand.

Ofcom’s stated goal is to promote free, universal access to public service channels. White pledged to make sure that PSBs retain their prominent spot on TV electronic programming guides when Ofcom consults on updates to the Code governing EPGs. However, she said this is not a long-term solution and that the new digital platforms are “beyond the scope of today’s regulation.”

White said that Ofcom expects PSBs to have unchallenged access to digital airwaves for “the next decade or longer”, serving the 19 million homes that receive linear TV in this way, but added that “ultimately, we expect television will increasingly be viewed over the internet.”

The Ofcom report suggested that UK competition regulation of the commercial activities of the BBC and other PSBs should take into account the changing dynamics of the global industry, meaning the online projects such as the BBC-led Project Kangaroo for a common on-demand platform, which was rejected 10 years ago, would likely be approved today.

“PSBs have sought to join forces in the past. In 2007, they put forward a proposal ‘Kangaroo’ to distribute their on-demand programming together. It was rejected by competition authorities at the time out of a concern that it would weaken the position of other players in the market. Since then the market dynamics have changed significantly. The competition framework would need to take account of those developments were a similar proposal to be put forward today. Part of the broader context would be the importance of preserving public service broadcasting alongside a consideration of market impacts,” Ofcom said.

The news came on the same day that Channel 4 outlined a radical new strategy that will see its content spend on ‘nations and regions’ (producers outside London) increase from the current 35% of total programming investment to 50% by 2023. The plans will also include the establishment of a new national headquarters outside London and two smaller creative hubs elsewhere in the UK.

Sharon White’s speech can be read in full here.