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Agenda. Introduction Findings Overall value Digital services Genres Subscription. The final study. 2350 respondents Nationally representative Supplemented by qualitative research 19 pilots for development. Consumer Value. Citizen Value. =. +.

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Agenda

Agenda

  • Introduction

  • Findings

    • Overall value

    • Digital services

    • Genres

    • Subscription


The final study

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

Consumer Value

Citizen Value

=

+

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


We started with willingness to pay

We started with willingness to pay

Gabor-Granger

Conjoint


Willingness to pay has several limitations

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

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

Gabor-Granger

National Voting

TOP DOWN

Non-normalised chip allocation

Non-normalised chip allocation

BOTTOM UP

These methods allowed us to measure value on a top-down and bottom-up basis


Top down and bottom up methods have these pros and cons

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

Monthly total value of the BBC(sum of consumer value and citizen value)

Monthly consumer value of the BBC

Top down(value of BBC as a whole)

£20.70

£18.35

Bottom-up

(value of BBC calculated as the sum of its constituent services)

£23.50

£18.70

Overall findings


Agenda1

Agenda

  • Introduction

  • Findings

    • Overall value

    • Digital services

    • Genres

    • Subscription


Finding 1

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.


81 of total value respondents think the bbc is worth the licence fee

Proportion willing to pay

100

Citizens

92

92

90

Consumers

81

Proportion willing to pay £10:

80

76

70

Citizens:

Consumers:

81.0%

76.0%

60

60

53

% willing to pay

50

42

40

32

30

19

16

20

9

6

6

10

4

3

2

0

5

10

15

20

30

40

50

60

Monthly price (£)

81% of “total value respondents” think the BBC is worth the licence fee


On average people are willing to pay more than twice the current rate of the licence fee

Demand curve for the aggregate value of the BBC

Citizens

Consumers

70

60

Equivalent monthly fee:

980,000

490,000

Citizens:

Consumers:

Current Licence Fee:

£20.70

£18.35

£10.00

1,470,000

50

735,000

Monthly price (£)

2,205,000

40

1,470,000

4,655,000

30

3,920,000

10,290,000

20

14,700,000

7,840,000

12,985,000

19,845,000

10

22,540,000

18,620,000

22,540,000

0

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Number of UK households

On average people are willing to pay more than twice the current rate of the licence fee

Current Licence Fee: £10 per month


There are two groups of non payers

Citizens NOT willing to pay:

Consumers NOT willing to pay:

25%

25%

24% NOT WTP £10

19% NOT WTP £10

20%

20%

16% WTP £5 but NOT £10

15%

15%

11% WTP £5 but NOT £10

10%

10%

8% not WTP £5

8% not WTP £5

5%

5%

0%

0%

£5

£10

£5

£10

There are two groups of non-payers


Those willing to pay 5 but not 10 tend to be multichannel families

Citizens and Consumers NOT willing to pay £10

24% NOT WTP £10

Age:

Middle-aged

(30-49 skew)

19% NOT WTP £10

Gender:

Male

16% WTP £5 but NOT £10

SEG:

Less well-off (C2DE Skew)

11% WTP £5 but NOT £10

Region:

Skew to Wales & NI

MC Access:

With multichannel

Citizens

Consumers

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

Those willing to pay £5 but not £10 tend to be multichannel families


Agenda

Citizens and Consumers NOT willing to pay £5

Age:

Older

(50-64 skew)

Gender:

Male

SEG:

Less well-off (DE Skew)

8% not WTP £5

8% not WTP £5

Region:

Skew to Scotland

MC Access:

Without multichannel

Citizens

Consumers

Age:

30-64

Gender:

Male

SEG:

Less well-off (DE Skew)

Region:

Skew to Scotland & NI

MC Access:

Without multichannel

The 8% who are “Refuseniks” tend to be male, downmarket and more likely to live in Scotland and Northern Ireland


Agenda2

Agenda

  • Introduction

  • Findings

    • Overall value

    • Digital services

    • Genres

    • Subscription


Finding 2

Finding 2

The BBC’s digital services are valued very highly.


Bbc s digital services are valued highly

Value of BBC services for citizens and consumers

25

£ per month

Total = £23.50

1.80

2.70

20

Total = £18.70

1.00

BBCi (online and interactive)

1.80

1.70

BBC Local Radio

3.60

1.20

BBC Digital Radio

15

2.70

BBC National Analogue Radio

3.90

Current Licence Fee:

£10 per month

3.20

BBC Digital TV Channels

10

4.00

3.50

BBC Two

5

5.70

5.40

BBC One

0

Citizens

Consumers

BBC’s digital services are valued highly


The digital services when compared to their costs deliver high value

Value of BBC services compared to costs

Citizens

Consumers

Cost of delivering service

5.70

BBC One

3.36

5.40

4.00

BBC Two

1.45

3.50

BBC Digital TV Channels

3.90

0.90

3.20

BBC National Analogue Radio

3.60

0.99

2.70

1.80

BBC Digital Radio

1.20

2.70

BBC Local Radio

0.61

1.70

1.80

BBCi

0.40

1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

£ per month

The digital services when compared to their costs deliver high value


The low cost base of the digital television channels mean that they generate a high value yield

Individual service values compared to costs

Citizens

Consumers

Cost of delivering service

0.61

BBC Three

0.32

0.50

0.55

BBC Four

0.17

0.45

0.77

CBBC

0.18*

0.63

0.80

Cbeebies

0.18*

0.66

0.77

BBC News 24

0.11

0.63

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

£ per month

*Combined cost for children’s channels (CBBC and Cbeebies)

The low cost base of the digital television channels mean that they generate a high value yield


Agenda3

Agenda

  • Introduction

  • Findings

    • Overall value

    • Digital services

    • Genres

    • Subscription


Finding 3

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

“Total value” respondents

Genre ranking

“Consumer value” respondents

Genre ranking

News

22.1

28.4

News

Regional News

19.6

Regional News

24.7

Wildlife

17.9

15.1

Soaps

Current affairs

15.3

Blockbuster Movies

14.5

14.6

Soaps

14.5

British Comedy

Education

14.4

Wildlife

13.3

Consumer programmes

14.0

12.7

US Films

13.9

British Comedy

British Films

12.2

12.7

Football

12.0

British Drama

11.9

British Films

11.5

Football

0

5

10

15

20

25

30

0

5

10

15

20

25

30

Average ranking score(out of 38)

Average ranking score(out of 38)

News, regional news and home-produced programmes were genres that were ranked most important


Agenda

Comparison of ranking scores between citizens and consumers

30.00

News

25.00

Regional News

20.00

Wildlife

Citizen ranking score of most important

Current affairs

15.00

Soaps

Education

Consumer programmes

Football

British Comedy

British Films

History

Science

Sport

Other local programmes

Blockbuster Movies

10.00

British Drama

US Films

Gardening

Investigative programmes

Period Drama

Home & DIY

Chat shows

Politics

Food & Cookery

Quiz Shows

Classical music

US Comedy

Arts

Children’s Animation

Popular music programmes

Business

5.00

Reality TV programmes

Religion

US Drama

Observational documentary

Children’s Live Action

Foreign Films

Art house / independent films

0.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

Consumer ranking score of most important

The high correlation between both groups shows that public service can include a wider variety of genres


Agenda4

Agenda

  • Introduction

  • Findings

    • Overall value

    • Digital services

    • Genres

    • Subscription


Finding 4

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

70

60

50

Annual net consumersurplus: £2,597m

40

Monthly Price (£)

Annual consumer deficit:£303.6m

30

20

10

Current LicenceFee: £10 per month

0

0

5

10

15

20

25

Number of UK households (millions)

Currently the BBC generates a consumer surplus of over £2.5 billion

A

B


Agenda

Amount of income earned if BBC werea subscription service

Income (£)

3,000,000,000

Current BBC Income (£2.9 billion)

2,500,000,000

2,000,000,000

Equivalent monthly fee:

Revenue Maximising Price:

Income:

Number of HHs at £13:

Drop in Income atMaximising Price:

£13.00

£2.37bn

15.2m

£522.7m

1,500,000,000

1,000,000,000

500,000,000

0

0

10

20

30

40

50

60

70

Monthly price (£)

The BBC would need to charge £13 per month if it were a subscription service to maximise its revenues


At 13 per month the welfare loss would be 300m

Net consumer welfare

70

60

50

40

-£532.8m

-£70.8m

£303.6m

Monthly Price (£)

30

Optimal subscription price: £13 per month

20

10

Current Licence Fee: £10 per month

C

D

0

0

5

10

15

20

25

Number of UK households (millions)

At £13 per month the welfare loss would be £300m

B


If the bbc were to offer different subscription packages 58 of households would opt out entirely

Service package

Monthly subscription price

Percentage of consumers who would subscribe

Number of households

Annual 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

If the BBC were to offer different subscription packages 58% of households would opt out entirely


Conclusions

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


Conclusions1

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


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