2. Agenda Introduction Findings -Overall value -Digital services -Genres -Subscription

3. The final study 2350 respondents Nationally representative Supplemented by qualitative research 19 pilots for development

4. 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 ValueCitizen Value =+

5. We started with willingness to pay Gabor-Granger Conjoint

6. Willingness to pay has several limitations Not the most appropriate performance indicator for the BBC -Useful for Sky -It doesnt capture the externalities There are research effects -Respondents dont 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

7. 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

8. These methods allowed us to measure value on a top-down and bottom-up basis Consumer ValueTotal Value TOP DOWN Gabor-GrangerNational Voting BOTTOM UP Non-normalised chip allocation

9. 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 BBCs services The bottom-up method removes any gap that might exist because of a lack of awareness

10. 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£18.35 £23.50£18.70 Bottom-up (value of BBC calculated as the sum of its constituent services)

11. Agenda Introduction Findings -Overall value -Digital services -Genres -Subscription

12. 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.

13. 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 9 6 4 92 76 53 32 16 6 3 2 Proportion willing to pay 0 10 20 30 40 50 60 70 80 90 100 510152030405060 Monthly price (£) % willing to pay Citizens Consumers

14. 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 19,845,000 14,700,000 10,290,000 4,655,000 2,205,000 1,470,000 980,000 22,540,000 18,620,000 12,985,000 7,840,000 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 05,000,00010,000,00015,000,00020,000,00025,000,000 Number of UK households Monthly price (£) Citizens Consumers Current Licence Fee: £10 per month

15. 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£10 0% 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£10 0% 5% 10% 15% 20% 25%

16. 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 CitizensConsumers 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

17. 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

18. Agenda Introduction Findings -Overall value -Digital services -Genres -Subscription

19. Finding 2 The BBCs digital services are valued very highly.

20. BBCs digital services are valued highly BBCi (online and interactive) BBC Local Radio BBC Digital Radio BBC National Analogue Radio BBC Digital TV Channels BBC Two BBC One Value of BBC services for citizens and consumers £ per month CitizensConsumers 0 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 1.20 1.70 1.00 Total = £18.70 Current Licence Fee: £10 per month

21. 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 0.001.002.003.004.005.006.00 £ per month Value of BBC services compared to costs CitizensConsumersCost of delivering service BBC National Analogue Radio BBC One BBC Two BBC Digital TV Channels BBC Local Radio BBCi

22. 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* Individual service values compared to costs £ per month 0.000.100.200.300.400.500.600.700.800.90 *Combined cost for childrens channels (CBBC and Cbeebies) CitizensConsumersCost of delivering service BBC News 24 Cbeebies CBBC BBC Four BBC Three

23. Agenda Introduction Findings -Overall value -Digital services -Genres -Subscription

24. Finding 3 News, soaps, British drama and British comedy are all perceived to be important public service genres

25. 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 15.1 24.7 28.4 Total value respondents Genre ranking British Films Football British Comedy Consumer programmes Education Soaps Current affairs Wildlife Regional News News Average ranking score (out of 38) 030510152025 11.9 12.7 13.9 14.0 14.4 14.6 15.3 17.9 19.6 22.1 Consumer value respondents Genre ranking News Football British Drama British Films US Films Wildlife British Comedy Blockbuster Movies Soaps Regional News Average ranking score (out of 38) 030510152025

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

27. Agenda Introduction Findings -Overall value -Digital services -Genres -Subscription

28. 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

29. Currently the BBC generates a consumer surplus of over £2.5 billion Consumer surplus 510152025 Number of UK households (millions) 0 10 20 30 40 50 60 70 0 Monthly Price (£) Current Licence Fee: £10 per month A B Annual net consumer surplus: £2,597m Annual consumer deficit: £303.6m

30. 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 were a subscription service 10203040506070 Monthly 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

31. At £13 per month the welfare loss would be £300m Net consumer welfare 510152025 Number of UK households (millions) 0 10 20 30 40 50 60 70 0 Monthly Price (£) B DC -£532.8m-£70.8m Current Licence Fee: £10 per month Optimal subscription price: £13 per month £303.6m

32. 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 £74%0.9m£75m BBC One + BBC Two £917%4.1m£438m BBC One + BBC Two + BBC digital channels £1122%5.5m£719m Opt out of all packages N/A58%14mN/A TOTALN/A100%24.5m£1,232m

33. Conclusions Willingness to pay has a role but doesnt 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

34. Conclusions There is overwhelming support for the Licence Fee The BBCs digital services are valued very highly Subscription would have an adverse impact on citizens, consumers and the BBCs finances News, soaps, British drama and British comedy are all perceived to be important PSB genres