The announcement by UK broadcasters BBC and ITV that they are setting rivalries aside and launching a new stream service – BritBox – outlines just how disrupted the old school world of TV has become by OTT.
The move, which will see the creation of a streaming service run by ITV, but featuring box set content, top picks and, eventually, new drama from both broadcasters, is aimed squarely at getting the two old school broadcasters back in the game.
“The move by the BBC and ITV to create, what for British viewers would once have been considered the streaming holy grail, can be seen as another attempt by established national broadcasters to regain key market share from Netflix,” says Lars Larsson, CEO, Varnish Software. “While it’s certainly a bold move, especially if the massive back catalogue of both channels is made available, it will still be an uphill challenge, as it has been for all legacy broadcasters.”
However, as Larsson points out: ““The onus is very much on the BBC and ITV to do something radical to pull eyeballs to them, and offering a slightly lower price won’t be sufficient. Both broadcasters are trusted brands already, but to succeed in a digital arena they not only need a fantastic, intuitive user interface, but their content needs to be delivered with as low latency as possible.”
Priced at £6 per month, the service is likely to be aimed firstly at augmenting existing Netflix and Amazon Prime subscribers TV diet, but it is widely seen as being a move to slowly up original content and poach back all those viewers who have gone to Netflix.
“The pricing of BritBox at £5.99 is a very deliberate move to undercut rivals such as Netflix and Amazon Prime,” says Greg Harwood, pricing specialist and Director at Simon-Kucher & Partners. “For this low price BritBox customers will be able to stream across multiple devices, on demand, ad free and all in one place; with the value proposition focused on the best of British creativity, With the market for streaming becoming increasing competitive this is a highly strategic decision.”
This is what we would call a penetration pricing, avers Harwood. “It is a tactic used by businesses to attract customers to a new product or service, and ultimately lure customers away from competitors.It is highly likely that BritBox are using this tactic as a land grab in the short term and over time will need to revisit the pricing to finance the production of original content.”
The charge for the service also raises some interesting questions for UK TV licence fee payers. “The BBC is still charging people for a TV license, an issue that has become a talking point in the face of rival services that, on paper, offer what they need; can they really start charging people extra to pay for the streaming service on top without triggering an exodus?” wonders Mark Pocock, home comms expert at www.broadbandchoices.co.uk.
“With this new commercial focus, will there be a drop in quality of the programmes BBC licence payers currently pay to enjoy, with the bigger, sexier programming being reserved for those who pay to keep up with the Original programming seeing heavy investment from Amazon and Netflix? They are currently claiming their newest programming will go to licence holders and iPlayer first, but whether they stick to this will only be revealed in the fullness of time and any programming that may be funded by licence payer’s money will be contentious if they aren’t given access.”
Other issues with BritBox
There are other challenges around the service too. Entering the competitive streaming market – even with a competitive price point – does not come without risks.
“With Netflix losing subscribers this quarter for the first time in years off the back of a price hike and a content lull even the poster child of streaming is feeling the pain,” says Harwood. “The risk of market saturation is real and this raises important questions for the content strategy of any streaming provider. Ultimately, the price they can charge in the market is a function of the value that they deliver. Those streaming services that continue to invest in original content to justify the price they charge, and continue to deliver a seamless user experience will win out here.”
Harwood goes on to warn: It is inevitable that not all will survive the battle, particularly once subscription fatigue sets in. What we can be sure of is that as the battle on price and more importantly value intensifies, this will be great news for the consumer.”
The final word goes to Richard Craig-McFeely, Strategy and Marketing Director, Digital Media, Interxion. He says: “BBC Director General Tony Hall claims “These are exciting times for people who love quality TV.” But what is quality content if it just doesn’t work? The success of BritBox will of course depend on the calibre and originality of content on offer, but the service will also need to provide a slick, intuitive video platform, and all of the connectivity and infrastructure required to provide a satisfactory user experience. With so much choice – perhaps too much – on the market today, consumers aren’t going to stand for a service that takes an age to load, or has poor audio and picture quality, even if it’s potentially a cheaper alternative to Netflix. I’m looking forward to seeing how BritBox can compete with established players who have already made crafty infrastructure decisions, and whether it’s able to live up to the hype.”