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Royal Television Society Baird Lecture -
³ÉÈËÂÛ̳ 2.0: why on demand changes everything

One of the biggest pleasures of being Director-General of the ³ÉÈËÂÛ̳ is the many contacts I have with the public. In meetings, on the street, on the phone, but most frequently through email and letter.

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I don't suppose there are many people in Britain who get quite so many thoughtful, closely argued, coherent letters. Or so many odd ones.

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"There was a time when I would have liked to be King of Britain", one recent correspondent began. "Now I have come to realise that Prince Charles is more suitably qualified for the job. I hope you will communicate this fact to all concerned."

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Here’s another: “Dear Sir, sometime ago I wrote on behalf of my daughter to Mr Dick Van Dyke. He was kind enough to send signed photographs of himself. I have since lost his address with which to thank him. Can you help in any way?"

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Fashion is another regular theme. "Dear Director-General, are there no longer dress regulations at the ³ÉÈËÂÛ̳? Like many others, I am appalled at the tieless habit that has suddenly invaded our screens. How scruffy the open-necked community appear!"

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As another correspondent was kind enough to note: "the middle-aged male neck is not a thing of beauty!"

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How right they are.

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The White Paper and its critics

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Last week the Government published its White Paper about the future of the ³ÉÈËÂÛ̳.

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After well over two years of debate and argument, the White Paper represents a considered view about what the ³ÉÈËÂÛ̳ should do over the period from today to 2016 and how it should be organised.

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Licence-fee funding is retained. The ³ÉÈËÂÛ̳ Governors are replaced by a new body, the ³ÉÈËÂÛ̳ Trust. The ³ÉÈËÂÛ̳'s traditional public purposes – modern versions of Reith's original inform, educate, entertain – are joined by another which is to help build digital Britain.

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That role, the Government says, is 'unique among broadcasters'.

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The White Paper, in other words, is a strong endorsement of the continued centrality of the ³ÉÈËÂÛ̳, not just in national cultural life, but in the development and roll-out of the next phase of broadcasting's technological future.

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For some commentators, this was all a bit of a disappointment: a 'missed opportunity' was the verdict of some politicians and some newspapers.

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I think there are two propositions underpinning this reaction.

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The first is that, at a moment when media consumption is being transformed by digital technology, a publicly-funded, monolithic broadcaster like the ³ÉÈËÂÛ̳ looks increasingly irrelevant.

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To support this, the commentators note the decline in the share of ³ÉÈËÂÛ̳ ONE over the past few years.

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They do not of course quote the share of our digital TV channels, our radio portfolio or our website, all of which are growing – the last explosively so, especially in broadband households.

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In fact these critics tend not to mention the ³ÉÈËÂÛ̳'s presence on the web at all because it undermines their argument.

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They would rather leave readers with the impression that the ³ÉÈËÂÛ̳ has remained a strictly traditional broadcaster facing oblivion as newer forms of media begin to bite.

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The second proposition comes at the question of the ³ÉÈËÂÛ̳'s future from the opposite direction.

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Listen to these commentators and the ³ÉÈËÂÛ̳ is not a weakening national asset but a strong and growing threat.

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Far from being trapped in its analogue past, it's dabbling in all sorts of digital activities.

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The danger this second school of criticism describes is not obsolescence but crowding out, the risk of publicly-funded ³ÉÈËÂÛ̳ forays into new media will make it difficult or impossible for others to launch products and services and to build markets of their own.

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Tonight I want to look at both these arguments through the prism of one proposed new ³ÉÈËÂÛ̳ service, which is the on demand application with the working title of My³ÉÈËÂÛ̳Player.

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We've recently completed a 5,000 household trial of the Player and I'll give you some of the emerging findings from that trial.

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And I'll also lay out the regulatory steps we intend to take the Player through on its way – we hope – to approval and launch.

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An on demand age

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But I should begin by explaining why the ³ÉÈËÂÛ̳ got involved in on demand in the first place.

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The ³ÉÈËÂÛ̳ model is conceptually very simple. The public give us the licence-fee. In return we give them – or try to give them – outstanding, distinctive content.

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Historically, it was quite difficult to get the right content in front of the right licence-payer.

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They weren't in, or they were watching or listening to another channel, or they didn't know about the programme or know how much they'd value it if they did catch it.

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Broadcasting is what economists call an information good: consumers don't know the value of it until they've consumed it so it's difficult to allocate efficiently.

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On demand changes all of this. It means you can potentially consume ³ÉÈËÂÛ̳ content at a time and on a device which suits you.

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Nor does a guillotine descend the moment after transmission: that brilliant programme you missed last night and which you only learned about when you read this morning's review in the paper is no longer lost forever or subject to the inevitably intermittent repeats strategy of our linear networks.

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You can read the review and then watch the programme.

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On demand then is not essentially about creating new content – it's not the equivalent of the ³ÉÈËÂÛ̳'s first forays into the internet in the 1990s where it set about creating an entirely new text-based service to sit alongside TV and radio.

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It's not like the launch of a new linear service – ³ÉÈËÂÛ̳ THREE, say, or Five Live – which inevitably means substantial new content investment.

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On demand is about making existing content far more available to the people who paid for it in the first place.

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It's a new means to achieve an end which has always been part of our mission.

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For our licence-payers it means greater convenience and greater value, not because we expect them to consume more content in absolute terms but because we would expect more of the content they do consume to be more directly relevant and attractive to them.

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On demand enables them to personalise what was once a series of one-to-many offerings from the ³ÉÈËÂÛ̳.

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On demand: the story so far

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My³ÉÈËÂÛ̳Player is sometimes talked about as if it was a major new departure for the ³ÉÈËÂÛ̳.

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I do think it marks a watershed – a major expansion of choice and functionality and a recognition that on demand is going to become an important – perhaps ultimately the most important – way in which we will put great content in front of the public.

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But in fact we already offer wide-ranging on demand services for both TV and radio programmes.

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Our Radio Player has led the charge. Last year there were around 100 million requests for content from this part of our website, in addition to many, many millions of requests for live streaming of our radio networks.

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We've also been trialling downloads of radio programmes for use on the iPod and other mobile devices.

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In January this year there were 1.9 million requests for podcast content with ³ÉÈËÂÛ̳ titles frequently dominating the overall podcasting top ten in the UK.

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Our news site also now has extensive on demand sound and video – individual reports, whole bulletins and increasingly user-generated content.

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Interestingly, on July 7th last year, which was by far the biggest day yet for the use of rich audio-visual content from our news site, the content most frequently demanded was the eyewitness user generated content (UGC) from the bomb scenes.

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Shaky, blurry images uploaded by one member of the public, downloaded by hundreds of thousands of other members of the public.

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It's a harbinger of a very different, more collaborative, more involving kind of news.

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Here, as at so many other points in the digital revolution, the public are moving very quickly now – at least as quickly as the broadcasters.

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We also deliver on demand programmes to the nearly two million households in the UK who already have on demand services delivered via cable and other means to their TV sets.

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The core of our offering here to date is up to 50 hours of free catch-up TV from the past seven days of the schedules.

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Again this new way of accessing content is proving popular with users. Of those customers who use NTL's on demand service, for instance, around 65% are taking advantage of our Pick of the Week catch-up content.

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Finally on our website and with broadband users in mind we've been experimenting with various kinds of both premiere and catch-up service.

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Live web streaming and the premiering of individual programmes was built into the ³ÉÈËÂÛ̳ THREE proposition – and formed part of the consent from the Secretary of State.

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So we've tried premieres and catch-up opportunities for ³ÉÈËÂÛ̳ THREE comedies like The Mighty Boosh, Nighty Night and The Thick Of It.

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More recently, ³ÉÈËÂÛ̳ TWO has re-launched its website with broadband users in mind – again with the chance to catch up on programmes you may have missed, or watch again something you've enjoyed, or to view clips.

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To quote one example, so far half a million people have requested clips from The Apprentice.

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The iMP trial

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The Player is a logical extension of these existing services and experiments. Let me tell you about our trial.

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It was a closed trial involving 5,000 people across the UK, balanced to ensure that the group reflected the population as accurately as possible – and not just the geeks and download experts.

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It started last November and finished at the end of February.

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The service enabled users to catch up on TV and radio programmes from the previous seven days.

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The trial used peer-to-peer technology so that, instead of having to unicast each programme file to each individual PC, it could meet each new request for a programme file from other PCs on the network who had already downloaded that file.

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Each file – and each packet of each file being moved around by peer-to-peer – had a Digital Rights Management or DRM wrapper around it. It was encrypted, in other words.

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When each new user sought to open the file, their PC sent a request to the ³ÉÈËÂÛ̳ server and, once our server was satisfied that they had the appropriate approvals, in this case that they were a member of the trial, we sent a unique key so that they could open and watch or listen to the file.

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But they were not able to copy or move the file from their PC and at the end of the seven days the file expired.

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The trial, in other words, offered an opportunity to catch and view but not to own – and one of the purposes of the trial was to test the integrity of this rights management system.

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All the evidence suggests that it proved very robust. And of course this kind of time-limited, restricted on demand proposition offers rights holders greater protection and more options for effective rights exploitation than traditional home recording does – whether by VHS or PVR.

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So how did the trial go? We're still working through the results, but some conclusions are already clear.

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First, the triallists were overwhelmingly positive about the application. 74 per cent said they would recommend it to a friend.

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A strong majority agreed that it was something the ³ÉÈËÂÛ̳ should offer as part of its public service delivery because of the control and flexibility it offered to licence-payers to find programmes they valued.

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Second, the so-called long tail effect really came into play. Our cable on demand trials with their more limited choices of titles have seen requests dominated by some of our best-known titles – EastEnders, Little Britain and so on.

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In the case of the Player, 85 per cent of all titles made available were downloaded.

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Again comedy, key dramas and mainstream documentaries loomed large but many niche programmes – programmes which often struggle to reach a substantial audience on linear channels – were both downloaded and viewed.

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The combination of on demand and a wide variety of choice does not seem to lead to a clustering of interest around a handful of well-known titles. On the contrary, users go exploring.

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This is very different from the serendipity of the classic public service schedule, that idea of the mass audience being led by chance or cunning scheduling into something challenging or improving. This is user-led and driven by individual curiosity or need.

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We also know, though we don't yet have detailed figures, that most of the programmes which were downloaded were actually watched.

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At least among this sample group, the ratio of viewing to downloading seems to be much higher than in the case of other forms of TV recording.

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So what didn't they like? Well first, broadband speed is important.

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Even at reasonably high speeds – two megabits a second, say – the downloads take quite a long time; though you can, of course, run them in the background or indeed book them in advance as you can with Sky Plus.

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Secondly, quite a few of the triallists objected to the seven-day rule. Why couldn't they hold onto unwatched programme files for longer? After all, viewers are allowed to keep programmes on VHS or PVR indefinitely.

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So towards the end of the trial we investigated with a number of variations on the 'use it or lose it in a week' theme, trying to find the best fit between user convenience and a fair position on the rights.

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We'll look at the results and, if necessary, adjust the proposal in the light of the user experience.

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The future

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We also want to make large parts of the ³ÉÈËÂÛ̳ archive available through the Player: too many of our greatest treasures remain inaccessible to the public.

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We also believe that a carefully selected and defined portion of the archive should be available for the public to use and repurpose themselves, whether as part of curriculum-based learning projects or for purely creative ends.

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This is what we call the Creative Archive. It's a vision we're collaborating on with other broadcasters and archive-holders.

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But we recognise that the Creative Archive raises particular rights and market impact issues and it will not form part of the initial Player approval or release.

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But adding substantial archive resources to the Player is really only the start.

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At present, the Player allows the downloading of files. Elsewhere, as you've heard, we enable users to live-stream ³ÉÈËÂÛ̳ services and programmes.

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In the future, we expect both downloading and streaming to develop rapidly.

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The ³ÉÈËÂÛ̳ is working with ISPs to explore a range of options by which live TV can be scalably broadcast over the open internet across the UK.

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One possibility we are actively looking at is live, peer-to-peer streaming. It is already big in China, led by piracy services.

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We want to look at how this innovative technique can be used legitimately, but we believe that there is potential for streaming of TV channels with a latency or delay of perhaps a couple of minutes to become available within 12 months: you have to imagine ³ÉÈËÂÛ̳ ONE being streamed to a number of PCs, packetised, sent to thousands of more PCs, reassembled, and watched in a matter of seconds.

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Another option which we are looking at involves working with internet service providers to consider an upgrade to the whole UK internet.

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Together with ITV we recently launched a technical trial of the multicasting technology which could achieve this.

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We are broadcasting all our TV channels and national radio networks for the next six months to the subscribers of the handful of advanced UK ISPs who support this new layer on the internet.

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We'll be looking at the outcome of this experiment, together with the other options, to work out the best way of making free-to-air live TV over the Internet a reality for audiences in the UK.

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If we're right and technology allows us to do that, then an utter revolution in broadcasting becomes possible.

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It is quite feasible to imagine the ³ÉÈËÂÛ̳ offering every enabled licence-payer the possibility of fully personalised, drag-and-drop TV channels.

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You come home. You look on the screen at a story-board for each of our TV schedules for tonight. You drag and drop the programmes you want to watch into whatever order you want and then press play.

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Or you make your schedule up out of the archive.

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Or you let us propose a series of virtual thematic channels: comedy, natural history, sport.

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Or you let us propose a channel based on your previous choices or the recommendations of your friends.

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This is not the far future. For broadband users, who will probably be well over half the country by then, this is less than five years away.

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And the second part of the revolution is the movement of media around the house and around people's lives.

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The Player trial is web-based: apart from the few techno-savvy users who already knew how to connect their PCs to the TVs, or to their PDAs, all those taking part in the trial had to watch the downloaded programmes on their PCs.

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Quite quickly we expect many more households to adopt a range of solutions for moving media from PC to TV and vice versa and from fixed devices to mobile ones and back again.

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We want to make Player and Player-like functionality for ³ÉÈËÂÛ̳ content available to as many licence-payers as possible on as many platforms and devices as possible.

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We are very happy to work with proprietary systems and operators as well as open systems like the web to deliver our content as conveniently as we can to the public.

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In the end, though, we believe it is likely and desirable that open, fully interoperable systems supported by common, effective Digital Rights Management controls, should become standard across platforms and devices.

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Back to the critics

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This picture of a possible on demand future is part of a bigger story – which is the ³ÉÈËÂÛ̳'s response to what is often referred to as Web 2.0.

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The second chapter in the web's history requires other changes from the ³ÉÈËÂÛ̳: a much greater focus on content management and supported metadata to allow for sophisticated search and navigation, a shift of gravity from text towards rich audio-visual content across the piece, an engagement with user-generated content, user-recommendation and personalisation which goes beyond anything I've touched upon this evening.

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And it requires a different kind of ³ÉÈËÂÛ̳, a ³ÉÈËÂÛ̳ that continues to generate content which drives public value, but now content that can last and which can be repurposed over time and across multiple platforms.

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Not a traditional broadcaster with a rather good website but a deliverer of high quality content over the web and other digital channels with, yes, some rather wonderful traditional TV and radio channels still in our portfolio.

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That's a transition that will take place over time but that's where we're headed: towards the ³ÉÈËÂÛ̳ 2.0.

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That, if you like, is my answer to the first set of critics I mentioned at the start of this talk.

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People who think we're stuck in the past and in the world of linear media just aren't paying attention – not so much to us and to what we're saying, but to our audiences and the way in which they are adapting, and adapting readily, to new ³ÉÈËÂÛ̳ services.

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The ³ÉÈËÂÛ̳ is on the path of digital migration and our progress so far compares well not just with other UK broadcasters but with the most advanced media companies in the world.

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But that still leaves the second group of critics – those who believe that the ³ÉÈËÂÛ̳ is still strong and dangerous as a crowder-out and stifler of private sector innovation in the new media space.

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Numbered among this group are some, though not all, of Britain's commercial broadcasters.

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Tonight's not the occasion to offer a detailed response to their arguments – beyond noting how convenient it must be to have the ³ÉÈËÂÛ̳ to blame for every poor management decision or weak creative choice.

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I believe the case for public service intervention in the digital space – to address what would otherwise be a significant under-investment in high quality content, especially British-made high quality content – has also been made elsewhere.

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If you believe that the digital environment, whether DTT, satellite, cable or broadband, will naturally lead to a new and major injection of investment into outstanding British journalism, comedy, documentary and drama, spend some time on the internet or on the EPG and look at progress so far.

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But these critics are, I believe, right when they demand that the market impact of proposed new ³ÉÈËÂÛ̳ services should be scrutinised before a decision is taken whether to launch them or not, and that it should be a factor in that decision.

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That's why I believe that the regime laid out in last week's White Paper is an advance on where we are today.

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Under this reform, the new ³ÉÈËÂÛ̳ Trust must conduct a so-called Public Value Test to decide whether a proposed new service really does deliver net public value.

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Part of that test examines the public value created – will the new service significantly further one or more of the ³ÉÈËÂÛ̳'s public purposes?

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But the test also includes a market impact assessment or MIA, commissioned jointly by the Trust and by Ofcom and conducted by Ofcom.

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Let's look briefly at how the MIA might affect the decision whether or not the ³ÉÈËÂÛ̳'s enhanced on demand application should be approved or not.

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The path to approval

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As you’ve heard, the ³ÉÈËÂÛ̳ already offers extensive on demand functionality on the web.

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You can live stream many, though not all, linear services, catch up on some, though not all, ³ÉÈËÂÛ̳ programmes and use a limited amount of our archive – principally our radio archive.

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Conceptually, moreover, the Player offers nothing that you have not been able to achieve at home for years with a VHS recorder or a Sky Plus Recorder.

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My³ÉÈËÂÛ̳Player is not therefore a new service in the way that the digital TV and radio channels launched earlier this decade were.

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However, we recognise that the Player represents a substantial broadening of the scope of our on demand offering and an enhancement of its functionality.

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That is why the ³ÉÈËÂÛ̳ Governors have concluded – rightly in my view – that there should be a Market Impact Assessment, with the participation of Ofcom, before they decide whether or not to approve it.

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The timetable will be as follows. Over the next few weeks, ³ÉÈËÂÛ̳ management will analyse the results of our trial and refine our proposal for the Player.

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Once they receive it, the Governors will begin a process of scrutiny which will include public consultation and a Market Impact Assessment.

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The assessment will seek to identify and, as far as possible, scale both the positive and negative impact of the launch of the Player on the wider market.

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It will be an important factor when the Governors come, probably in autumn of this year, to their decision.

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I only want to make two points in relation to the MIA.

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The first is to emphasise that the Player is not a proposition which offers new content to the public.

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It provides a different way for our licence-payers to access content which they have already paid for and which they could already watch or listen to with existing receiving equipment in their homes.

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Life On Mars or Fantabulosa! are already beamed out across the UK on network television. Making them available to cache on a PC as well as on tape or PVR certainly adds choice and convenience.

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It is far from obvious that it opens up a major new competitive threat to other content providers.

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Secondly, we should not underestimate the positive market impact which the Player could have.

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The White Paper calls for the ³ÉÈËÂÛ̳ to help 'build Digital Britain'. Analogue to digital television switchover is an important part of that process.

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I would argue, however, that the single most important element in building a truly Digital Britain is universal access to high speed broadband.

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Around the world and especially in the Far East, countries which are most committed to being winners in the ferociously competitive emerging global market are focusing on ensuring that as much of their population as possible has access to high speed or ultra high speed broadband.

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This is the most credible way not just of delivering a rich diet of media entertainment to the home but of ensuring that instant, high quality information and educational resources are available to all and that new, remote and interactive ways of building communities and businesses are available to everyone.

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Now we believe that our Player – and, more broadly, our commitment to ensure that bbc.co.uk is at the leading edge of Web 2.0 – will drive broadband.

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It will encourage those who are not on line to go on line. It will encourage those who are not on broadband to adopt it.

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And within broadband it will encourage users to consider higher and higher speeds.

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The next stage of the internet's development will see dramatic change.

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In the Nineties, the ³ÉÈËÂÛ̳ played a significant role – of course alongside many others – in getting Britain to take the Internet seriously and to use it as a useful, practical resource.

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We believe that we have a significant role once more in helping to ensure that this country remains in the vanguard.

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Our critics would have you believe that the ³ÉÈËÂÛ̳ is platform-specific. It's really and should definitely remain a linear TV and radio broadcaster. It has no real business getting involved in new digital media.

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Well our audiences beg to differ. bbc.co.uk is already one of our most popular services and is regarded by its users as being every bit as essential as ³ÉÈËÂÛ̳ television and radio.

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In terms of functionality and scope, as the Player trial shows, our audiences are willing us on: asking for richer content, better search, more options, faster response times.

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But more than that, the whole idea that media should be platform-specific is outdated.

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Already ³ÉÈËÂÛ̳ News is a proposition which transcends any one platform.

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We deliver it on the web, to mobile devices, on radio, on TV. It's local, it's national, it's global. Increasingly we think of it as a single proposition.

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The same will ultimately be true of all of our content.

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Future audiences will move effortlessly from medium to medium, from device to device. That implies a very different ³ÉÈËÂÛ̳.

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But it doesn't mean that the ³ÉÈËÂÛ̳ is turning away from its fundamental mission.

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On the contrary, technology means that we can fulfil that public service mission more effectively than ever before.

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In the end, that is why on demand changes everything.

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