GM Thought of the Week: The Future is Content: Netflix vs BBC
As the cold winter nights draw in, a plethora of new content is about to be dropped on Netflix (House of Cards: Season Finale, Narcos: Mexico & The Sinner Season 2 to name but a few). Over the last 5 years, it simply staggering as to how Netflix has grown from a DVD rental site, to its position as one of the biggest broadcast companies in the world. In fact, recent figures suggest that Netflix is currently responsible for a whopping 15 per cent of global internet traffic!
The most valuable independent broadcast company in the UK is ITV, currently worth £8.5 billion. The BBC itself has an income of around £5 billion. Compare this with the US. A couple of weeks ago Comcast bought Sky for £39 billion, almost five times the value of ITV. Comcast is worth more than $150 billion, and Disney and Netflix are worth similar sums. Amazon and Apple, two trillion-dollar companies, are also starting to play heavily in TV.
By the end of the decade, the combined spend on content of many of these companies will reach $100 billion a year. This should come at no surprise with the cost of some of the biggest series produced by Netflix including The Crown cost a reported $100m a series (roughly the same cost as 10 BBC dramas)!
The size and scale of these global companies continues to be great news for Britans talent and creativity. The Crown relies heavily on British talent and of course many scenes are the backdrop to UK locations. Statistics from the British Film Industry published last week show that spending in the UK on high-end drama has doubled, and spending on film production has increased by almost 50 per cent in the past few years.
Three of the biggest film franchises in the world — James Bond, Star Wars and Harry Potter — are all made in the UK. The film and television sectors now make a significant contribution to our economy and to economic growth.
But if we want this success to continue, we cannot simply rely on investments from abroad. The BBC & ITV are fundamental to the UK broadcasting ecology, and it is vital that they continue to thrive.
Currently, the BBC seems to be riding on a high. From a smashing start to the hotly anticipated Doctor Who, to a record-breaking series in the Bodyguard, not to mention Strictly Come Dancing, the BBC continues to achieve ratings that are the envy of their rivals at ITV.
But all is not what it seems. Last week the head of content for the BBC, Charlotte Moore, pointed out in a high-profile media lecture that the BBC’s spending power has declined by almost a fifth in the past decade. British media companies now face a competitive environment that was unimaginable a decade ago.
The BBC is now responsible for funding the free TV license for pensioners. This will save the Government a significant annual sum. The move was in attempts to try and meet a welfare savings promised in the 2015 election, but by the end of the decade this will cost the BBC an estimated £700 million a year, a huge proportion of its budget.
This along with other Government initiatives will undoubtedly cost the BBC money which it cannot afford to lose at a time when producing new content is vital to keep audiences engaged. Long gone are the days when the BBC & ITV were the main players in producing new content but today we need them more than ever!