Slides for BCU Presentation, Nov 2009.
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Presentation Birmingham City University Damian Radcliffe 26 th November 2009
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Archive presentation of slides discussed with BCU Media students in November 2009, focussing on PSB (Public Service Broadcasting) and changes to that sector over the past five years. *All data therein is already in the public domain and the presentation was distributed to students at the time*.The same presentation also given to University of Staffordshire and London Met University in March 2010.Some of this remains quite current, some already feels quite dated!
Transcript of Slides for BCU Presentation, Nov 2009.
Presentation Birmingham City University
Damian Radcliffe26th November 2009
2
Agenda
1. About Ofcom
2. Communications Market in the UK today
3. Hot topic (1) – Public Service Broadcasting
4. Hot topic (2) – Delivering news, media and information at a local level
Break
5. Hot topic (3) – the Digital Economy Bill
6. Broadcasting Code
3
1: About Ofcom
About Ofcom
• Ofcom is the regulator for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services
• It is independent of Government but accountable to Parliament
• Ofcom’s sponsoring Departments of State are:
– the Department for Business, Innovation & Skills (BIS)
– the Department for Culture, Media & Sport (DCMS)
• Set up - and its powers and duties defined – by the Communications Act 2003
6
Ofcom’s statutory duties
• Under the Communications Act 2003
“It shall be the principal duty of Ofcom, in carrying out their functions;(a) to further the interests of citizens in relation to communications matters; and(b) to further the interests of consumers in relevant markets, where appropriate by promoting competition"
• Ofcom’s specific duties fall into six areas:
– Ensuring the optimal use of the electro-magnetic spectrum – Ensuring that a wide range of electronic communications services - including high
speed data services - is available throughout the UK – Ensuring a wide range of TV and radio services of high quality and wide appeal – Maintaining plurality in the provision of broadcasting – Applying adequate protection for audiences against offensive or harmful material – Applying adequate protection for audiences against unfairness or the infringement of
privacy
What we don’t do
8
2: Communications Market in the UK today
9
• Trends • Communications markets and the recession
• Consumers take control of their viewing
• Broadband sees double-digit growth in 2008
• Communications in the Nations and Regions
The communications market in 2008 – key stories
10
Communications industries generated revenue of £51.8bn in 2008, but growth slowed…
Industry revenue grew by 0.2% (compared to 3.5% in 2007)
34.4 36.8 37.4 38.2 39.5 39.5
9.210.0 10.5 10.6 11.1 11.21.11.2 1.2 1.1 1.2 1.1
£44.7bn £48.0bn £49.0bn £49.9bn £51.7bn £51.8bn
0
20
40
60
2003 2004 2005 2006 2007 2008
Rev
enue
(£b
n)
Radio
TV
Telecoms
Total
11
…while take-up of all key services continued to rise
Source: Ofcom research/operators
58
17 20
4
68
2227
11
0
20
40
60
80
Broadband 3G mobile DVR HDTV
Tak
e-up
(pe
r ce
nt)
2008 Q1 2009 Q1
Broadband and HDTV among the fastest growing services
12
Time per day spent using communications services
Source: Ofcom/BARB/RAJAR/Nielsen Netratings (internet is home use only)
224
189
9 15 6
225
172
2513 11
0
50
100
150
200
250
Television Radio Internet Fixed Mobile
Min
utes
per
per
son
per
day
2003
2008
5 year CAGR
0.1% -1.9% 21.5% -3.4% 15.2%
On average, consumers spent a little more time using communications services – home internet on the rise, but radio listening declines
13
• Trends
• Communications markets and the recession• Consumers take control of their viewing
• Broadband sees double-digit growth in 2008
• Communications in the Nations and Regions
The communications market in 2008 – key stories
14
3%
6%
10%
10%
16%
19%
20%
25%
29%
32%
41%
41%
47%
0% 10% 20% 30% 40% 50%
Personal care, toiletries, cosmetics
Household groceries
Home telephone calls
Broadband subscription
Television subscriptions
Spend on mobile phone
Newspapers and magazines
Clothing or footwear
Music, books, DVDs
Health club membership or sports
New furniture or home improvements
Holidays/weekends away
Nights out
Communications services appear resilient
Items where consumers are most likely to cut back their spending
Source: Ofcom commissioned research (sample = 862)
15
31.34 29.11 26.64 24.90 23.49 22.26
29.13 33.51 34.88 33.66 33.98 32.04
7.25 9.22 10.69 11.53 11.37 10.71
25.71 26.35 26.97 26.57 26.64 26.24
2.372.35 2.34 2.20 2.60 2.44
£95.80 £100.54 £101.52 £98.85 £98.08 £93.69
0
20
40
60
80
100
120
2003 2004 2005 2006 2007 2008
£ pe
r m
onth
(20
08 p
rice
s) Radio
TV
Internet & broadband
Mobile voice & text
Fixed voice
Household spend on communications fell again in 2008…
In real terms, UK household average spend was £93.69 a month, down 4.7%, or £4.39, on 2007
Total
16
…and more consumers are buying services in ‘bundles’
20 22 20 23 2721 23
55 6
78
1316
44 3
4
5 6
7
2931
29
35
40 39
46
0
10
20
30
40
50
Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q1 2008 Q1 2009
Pro
po
rtio
n o
f co
nsu
me
rs (%
)
Unspecified
Triple-play
Double-play
46% of consumers now buy two or more communications services from a single supplier, up from 39% a year earlier
Source: Ofcom research
17
Communications Market 2008 - key stories
• Trends
• Communications markets and the recession
• Consumers take control of their viewing
• Broadband sees double-digit growth in 2008
• Communications in the Nations and Regions
18
Consumers are taking control of their TV viewing…
• 27% of homes have a DVR (9 million devices now sold)– 15% of viewing in DVR homes is time-shifted using their recording device
• 23% of households with home internet watch online catch-up TV– 15% of internet users watch programmes on the BBC’s iPlayer service
• 52% of cable TV homes (1.8 million) accessed VoD on their television– On average, cable homes viewed VoD programmes 30 times per month, at Q4 2008
DVRs and online and TV catch-up services are helping consumers to time-shift their viewing. Our research shows:
Source: Ofcom research/operators
…and watch more TV they enjoy with on-demand
19
65%
78%
80%
0% 20% 40% 60% 80% 100%
I now watch more programmes that I enjoybecause of having access to TV content
online
I now watch more programmes that I enjoyas a result of being able to choose what Iwatch when I want through on-demand…
I now watch more programmes that I enjoybecause of my DVR
Agreement with statements on non-linear viewing
Source: Ofcom research
20
Communications Market 2008 - key stories
• Trends
• Communications markets and the recession
• Consumers take control of their viewing
• Broadband sees double-digit growth in 2008
• Communications in the Nations and Regions
21
Take-up of broadband, combining landline and mobile, increased to 68% at Q1 2009, up by 10 percentage points year on year
Source: Ofcom research
More than two-thirds of households have broadband – double-digit growth between Q1 2008 to Q1 2009
65 67 69 71 72 74
57 5763 64
6770
11
27
4152
5865
120
20
40
60
80
Q4 2004 Q4 2005 Q4 2006 Q1 2007 Q1 2008 Q1 2009
Pro
port
ion
of H
/H (
%) PC take-up
Internet take-up
Fixed broadband take-up
Mobile broadband take-up
22
Mobile broadband connections exceeded 260,000 in May 2009. 75% of mobile broadband homes also have landline broadband
Source: GfK
Mobile broadband enters the mainstream
85113 126
99 105 12610
3539 86 72
138
96
148165
185 177
263
0
100
200
300
Mar 2008 Jun 2008 Sep 2008 Dec 2008 Mar 2009 May 2009
New
con
nect
ions
(00
0's)
Pre-pay
Post-pay
23
Communications Market 2008 - key stories
• Trends
• Communications markets and the recession
• Consumers take control of their viewing
• Broadband sees double-digit growth
• Communications in the Nations and Regions
24
Top telecoms towns and cities
Aberdeen: VOIP 30%
Dundee: Bundles 65%
Leeds: Mobile broadband 29%
Norwich: Online TV 49%
Cardiff: Mobile-only households 29%
Belfast: Mobiles 94%
Source: Ofcom research, selected towns and cities
25
3: Hot Topic (2): PSB “under pressure”
PSB purposes
26
1. Informing our understanding of the world - To inform ourselves and others and to increase our understanding of the world through news, information and analysis of current events and ideas
2. 2. Stimulating knowledge and learning -To stimulate our interest in and knowledge of arts, science, history and other topics through content that is accessible and can encourage informal learning
3. 3. Reflecting UK cultural identity - To reflect and strengthen our cultural identity through original programming at UK, national and regional level, on occasion bringing audiences together for shared experiences
4. 4. Representing diversity and alternative viewpoints - To make us aware of different cultures and alternative viewpoints, through programmes that reflect the lives of other people and other communities, both within the UK and elsewhere
PSB characteristics
27
1. High quality - well-funded and well-produced
2. Original - new UK content rather than repeats or acquisitions
3. Innovative - breaking new ideas or re-inventing exciting approaches, rather than copying old ones
4. Challenging - making viewers think
5. Engaging - remaining accessible and attractive to viewers
6. Widely available - if content is publicly funded, a large majority of citizens need to be given the chance to watch it
28
The central challenge – the move from analogue to digital model of public service broadcasting
Channel shares in all homes, 1986 - 2008
Source: BARB
30
Impact of Digital TV
• Over 90% of households now have access to Digital TV
• Digital Switchover means all homes will be multi-channel by 2012
• Digital homes have access to around 40 channels on Freeview and over 400 channels on multichannel subscription – representing huge choice for viewers.
• By 2012 the 5 channel home will be moribund. For many it already is.
Digital TV progress 1998-2008
Source: Ofcom
54.2%
62.6%
26.4%
32.6%40.5%
44.3%46.0%
71.8%
78.6%86.5%
88.9%
88.8%
11.5%
0.9%
27.9%
37.6%40.9%
50.2%59.4%
77.2%
69.5%
86.3%
37.0%27.7% 28.9% 30.8% 32.8% 34.7%
14.5% 16.8% 21.5%24.2% 36.1%
12.8%13.5%
11.9% 13.4%13.6%
13.3%13.2%13.3%
14.8% 14.8%
12.4%
38.4%
25.7%
0.0%
4.7% 11.9%
18.5% 30.4%
5.2%4.2%
2.3%
36.7%
0%
20%
40%
60%
80%
100%
Q41998
Q41999
Q42000
Q42001
Q42002
Q42003
Q42004
Q42005
Q42006
Q42007
Q42008
TotalMultichannel
Total digital
Satellite
Cable
DTT-only
Data from Q1 2007 is basedon consumer research
**** Chart using new GfK research from Q1 2007
Market share of platforms – All sets Q4 2008
Under a third of sets remain analogue terrestrial
32
Analogue terrestrial27.6%
Cable6.2%
Free-to-view satellite1.2%
Pay satellite20.7%
Digital terrestrial43.1%
ADSL0.1%
Source: GfK research
33
The UK TV market is experiencing a period of rapid change
Broadband Digital television All 16-24
Penetration of digital technologies rising Audience share for the five main channels falling
Source: Ofcom
2003 2007 2003 2007 2003 2007 2003 2007
Source: BARB
54%
11%
47%
84%
78%
64%69%
51%
Market changes
35
The growth in digital platforms is creating new opportunities for audiences
0%
20%
40%
60%
80%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008Q3
Fixed line broadband
Digital TV
Mobile broadband
Penetration of digital technologies (%)
Source: Ofcom, GfK, Sky, Virgin Media. Mobile broadband includes penetration of 3G phones plus dongles
36
Source: Ofcom Research (Technology Tracker)
DVR penetration in all homes
27%
% of homes
37
0
20
40
60
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08
BBC iPlayer monthly online streams/download requests, 2008
BBC iPlayer online usage
Str
eam
s/do
wnl
oads
(m
)
TV iPlayer launches on Virgin Media
Autumn TV schedule launches
Despite more choice, TV consumption is declining
224
173
6 15 5
218
164
24 14 10
0
50
100
150
200
250
Television Radio Internet Fixed telephony Mobiletelephony
Min
utes
per
per
son
per
day
2002
2007
% growth 2002-2007
-3% -5% 295% -7% 88%
Total viewing hours of National News, main PSB channels only, by age group
Source: BARB, 2008
1528
4164
94
130
1
33
4
6
8
8
14
21
29
34
42
3
4
3
4
5
1
2
2
2
4
69
0
35
70
105
140
175
210
16-24 25-34 35-44 45-54 55-64 65+
Five
Channel 4
ITV1
BBC Two
BBC One
28 50 19571 143
Total hours per year watched by average individual (4+)103
40
PSBs face declining income as well as audiences
Increased competition for advertising revenue from other TV channels and internet
Other channels
Channel 4
ITV1
ITV1
Other channelsChannel 4
1993 TV advertising 2007 TV advertising
41
Investment in UK content depends on public service channels but is already falling
£2,791m £2,739m£2,620m
£2,485m
£234m £251m £274m £268m
2004 2005 2006 2007
PSBs
Non-PSBs
Source: Oliver & Ohlbaum Assocs PSB content – excludes sport
42
Source: Ofcom/Broadcaster returns. Note: figures are expressed in 2008 prices. Figures include GMTV.
£m
£2,620£3,064m £2,952 £2,848 £2,697
Spend on first-run originated output on the five main networks
Total
43
4: Delivering news, media and information at a local level
Our work focuses on our statutory duties set out in the Communications Act
44
• Secure wide range of TV and radio services of high quality and wide appeal
• Maintain sufficient plurality of providers
• Licence national and local analogue and community radio stations
• Ensure optimal use of the radio spectrum – including for Local TV
Plus, in addition:
• Role in conducting Local Media Assessments for newspaper mergers
• Review operation of Media Ownership Rules for Secretary of State
Our work spans different levels of localness
45
Local and regional media – the consumer view
Local journalism is important because it underpins democratic participation in the UK
46
Informing Representing
Campaigning Interrogating
Consumers value local and regional content – particularly news
47
National news on TV
Local/regional news on TV
National newspaper
National radio
Local radio
Local paid for newspaper
local free newspaper
0 20 40 60 80 100
62
54
43
39
38
35
24
% saying local and regional content is very important - weekly users
Scores based on respondents importance rating 9/10 on a scale of 1-10. Source, Ofcom research
48
People using internet for local media more than they used to
Regional/local news on TV
Local radio
Free local newspaper
Paid for local newspaper
Newspaper/radio websites
Community websites
0% 20% 40% 60% 80% 100%
18
19
15
12
43
34
75
72
75
77
49
55
6
8
8
8
6
5
1
1
1
2
3
5
Do more About the same Do less Don't know
Use of local media now compared to two years ago
Source: Ofcom research
The internet has also created new opportunities and business models
• Local and regional newspapers online
• Ultra-local reporting and citizen journalism
• Emerging hyper-local and community internet services
• Location based services
• National classified advertising vehicles
49
But the growth of the internet as an advertising medium has created challenges for the sector
50
2000 2001 2002 2003 2004 2005 2006 2007 20080.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.1 0.1 0.1 0.2 0.2 0.3 0.5 0.6 0.6
0.1 0.1 0.1
0.1
0.2
0.3
0.4
0.6
0.7
0.2
0.4
0.8
1.2
1.6
2.0
£Billions)
Display
Paid for search
Other classified
Internet advertising spend by type at current prices, 2000 to 2008
47%
90%
40%
CAGR
Source: Advertising Association, IAB, PWC, WARC, Oliver & Ohlbaum Analysis
51
The recession has placed further pressure on regional and local media
0
500
1000
1500
2000
2500
3000
3500
2000 2001 2002 2003 2004 2005 2006 2007 2008
Total
DisplayAdvertising
ClassifiedAdvertising
Regional Press advertising revenues
Current Prices (£m)
Source : Advertising Association/ WARC (www.warc.com)
Structural Cyclical
52
The recession has put further pressure on regional and local media
2000 2001 2002 2003 2004 2005 2006 2007 20081500
2000
2500
3000
TV net advertising revenues
£m revenue at constant prices (2000)
Source : Advertising Association / WARC (www.warc.com)
Structural Cyclical
53
Percentage who state it is important to be on than more than one of the main channels
News
Current Affairs
News about Nation/Region
Current Affairs Nation/Region
Other programmes Na-tion/Region
0 20 40 60 80 100
86
77
76
73
65
Source: Ofcom Research
Consumers value plurality in regionally based TV news
Our analysis shows that the Channel 3 licences could face a deficit of £38-64m by 2012
54
Source: Ofcom
Cost Benefit of PSB status for the Channel 3 networkMillions
Ranges between higher and lower values based on current best estimates
The Government has proposed a new model for delivering regional news
55
• Independently funded news consortia (IFNCs) would bid to provide regional news service backed by public funding
• Including, but not be limited to, news on Channel 3
• Consortia awarded contracts based on public criteria, including:
- Reach & impact
- High production & editorial standards
- Financial strength
• Government has proposed pilots in Scotland, Wales and one English region
Local news consortia could also offer greater localness and cross media news provision
56
• News consortia could offer enhanced options for localness, by
- Extending local coverage beyond current regional transmission footprint
- Using news content gathered at local level to underpin extra local services • Exciting opportunity to try new models for local news across multiple
platforms, using new methods and technologies
• Consortia could also make news footage available more widely
Phased funding for news consortia could balance costs and benefits for C3 over 5 years
57
2010 2011 2012 2013 20140
40
80
120
160
200
Costs
Benefits
Source: Ofcom
Cost Benefit of PSB status for the Channel 3 network including IFNC funding
Ranges between higher and lower values based on current best estimates
58
A number of potential bidders have already emerged
A large number of stakeholders have responded to the DCMS consultation
• Majority expressed agreement that plurality in regional TV news is important and that commercial news providers are facing substantial pressures
• Many recognised that some form of additional funding may be required to sustain this
• Support for IFNCs as a mechanism to achieve this
• Some concerns raised:
– Commercial impact of public funding of regional news– Proposed use of the licence fee for non-BBC services – Impact of public funding on governance and impartiality of news– Complexity of awards process
59
We believe the future of the sector should be driven by the needs of citizens and consumers
60
• More localised, cross-media service
• Reinvigorated and fit for digital age
• New opportunities on DTT
• A wide choice of content, available on traditional platforms and online
• Thriving community media sector
• Continued provision of regional news on Channel 3 in doubt
• Local commercial radio sector under pressure
• Small local TV sector
• Local and regional newspaper closures
• Limited visibility of community media sector
Current challenges Future opportunities
All underpinned by innovative, grass roots journalism
Next Steps
61
• Government’s Digital Economy Bill underway
• Government leading on-going work on IFNC pilots
• Ofcom’s Statement with recommendations on Media Ownership Rules – to Secretary of State has been published
• Ofcom Consultation on DDR in due course
62
5: Hot Topic (3): The Digital Economy Bill
Digital Economy Bill
63
“The communications sector underpins everything Britain does as an economy and society. The rapid drive to digital technology is transforming how both businesses and people operate. And this digital revolution offers great opportunities.
Not only does the digital economy contribute around eight per cent of our GDP, it is vital for the success of every other area of productivity. It is growing in significance as we plan for recovery from the economic downturn. The Government is committed to securing the UK’s position as one of the world’s leading digital knowledge economies.
This Bill would put in place the necessary legislative measures to deliver the strategic vision set out in the Digital Britain White Paper.”
http://www.commonsleader.gov.uk/output/page2920.asp
Digital Economy Bill (2)
64
“The purpose of the Bill is to: Strengthen the nation’s communications infrastructures, equipping the UK to compete and lead in the global digital economy.
The main benefits of the Bill would be:1. Promoting a competitive digital communications infrastructure, through proposals
on radio licensing, changes to Ofcom’s duties and spectrum modernisation.
2. Providing essential support for creative industries in a digital world, through proposals on online copyright infringement and changes to copyright licensing.
3. Improving digital security and safety, by putting in place a classification system for boxed video games that meets the needs of parents and children.
4. Securing public service content in a rapidly changing broadcasting landscape, through action on the provision of news in the nations, regionally and locally, updating Channel 4 Corporation’s functions and future-proofing the Channel 3 and 5 licences.”
Digital Economy Bill (3) - main elements
65
• “Online infringement of copyright – tackling widespread copyright infringement via a two-stage process. First by making legal action more effective and educating consumers about copyright on-line. Second through reserve powers, if needed, to introduce technical measures, such as disconnection.
• Support the plurality of independent and high quality news in the Nations, locally and in the regions – giving Ofcom powers to appoint and fund Independently Funded News Consortia.
• Digital infrastructure and content – giving Ofcom new duties to promote investment in infrastructure and public service media content, and to carry out an assessment of the UK’s communications infrastructure every two years.”
Digital Economy Bill (4) - main elements (2)
66
• “Mobile and wireless broadband – enabling investment in next generation technologies through spectrum modernisation.
• Digital radio - updating the regulatory framework to make moves to digital switchover for radio possible by 2015.
• Channel 4 Corporation – updating its functions to encompass public service content on all media platforms - online as well as television.
• Video games – protecting children by making age ratings compulsory for all boxed games designed for those aged 12 or above.”
67
Questions & Break
68
6: Broadcasting Code
How you may have heard of us
70
Case Studies
1. Gordon Ramsay's Great British Nightmare, Channel 4
2. Casualty, BBC1
3. Breakfast Show, Kiss FM
4. Katie and Peter, ITV2
5. Sumo TV
