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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