Sunday, 10 February 2013

The future of TV. And it won't be TV.

February 2013 will be a milestone in the history of broadcasting : the month when streaming came of age as Netflix released their original drama series House of Cards, starring Kevin Spacey and directed by David Fincher.

If you haven't got Netflix, then here's how it works. Once you have your account online at, you can use the same sign-in across all your chosen devices. So long as you have broadband access with a download speed of at least 400K, Netflix can be streamed to your phone, iPad, laptop, desktop and even that old thing in the corner - your tv.

Many new tvs are internet-enabled and have wifi. You just log it into your home wifi. And most of these have the Netflix app built-in. If your tv isn't internet-ready, you can cheaply make it so with a simple black box like Apple TV or other wifi devices. Netflix has been very clever to ensure that its streaming is immediately available across all platforms.

The figures are impressive. Your first month is free, then it's about £6 a month. No other charges and as many movies and tv series as you can handle. You get your own home page where you can search through thousands of titles and create a queue for future viewing. This same info appears wherever you sign-in - in the UK or globally.

Netflix has 33 million worldwide subscribers already - this figure will grow rapidly. And their library of movies, tv series, docs and others will grow at the same speed. Already Netflix is generating £200m revenue a month - some £2.4bn a year.

It can easily afford to fund productions like House of Cards - in which it has invested £75m. It also steps in with co-funding - so Ricky Gervais' C4 series of Derek, currently airing in the UK only, will go global in April with its Netflix release.

For producers, Netflix offers a chance that very few broadcasters can currently offer - instant global release. House of Cards released on the same day globally. The days of region-specific releases on DVD are over.

What's the viewing experience like? Netflix seem to have nailed the old streaming problems with some intelligent software. Once you hit "play" for your chosen viewing, the Netflix system silently looks at your connection and adjusts the stream it sends to suit. Blocking and buffering during playback rarely happen. I was really surprised by how little bandwidth was needed for a good connection and have been happily watching the whole House of Cards series on a poor 500k downstream connection. The picture and sound quality is better than DVD.

And House of Cards was originally a BBC series 20 years ago. Netflix have that covered - the series is available to stream!

"Binge-viewing" was previously confined to boxed set DVD releases. Many is the lost weekend when we have watched 9 episodes of 24. Without any guilt! But Netflix have re-introduced the concept. By releasing a whole 13-part drama on one day, research is showing that about 37% of the audience has binged from Friday to Sunday and consumed the lot. So - the thirst is there. But can Netflix keep it sated?

The overhead of running Netflix is miniscule alongside, say, the BBC. The BBC gets £3.1bn a year in licence fee money - out of which it has to pay for 10 national tv channels, the Red Button service, 10 national radio stations, National services for Scotland, Wales and N Ireland plus over 40 local radio stations, BBC Online & BBC World Service. It employs 17,000 people and the salary bill alone is over £1bn. Your licence fee "tax" of £145 a year pays for all of that.

Netflix needs just 2,000 staff to generate its £2.4bn a year. A mix of full and part-time staff costs £75m a year. That's a very healthy ratio - and these people don't require as much space as the 17,000 BBC staffers. Let's not forget that Netflix owns nothing, however, and its business model is entirely based on licensed material from suppliers. But that's today. The future may well be different as Netflix digests the figures for original series - they will become major players on the production front.

And, of course, we must mention that the 17,000 at the BBC only know how ONE side of a balance sheet works. They have no concept of how to make money - just spend the stuff we happily give them.

So, the BBC and Netflix are vastly different organisations with different cultures - but catering to the same consumers. And consumers, fickle as we are, will always opt for the best deal for us.

I can foresee a future when the BBC licence fee is under £100 a year and the BBC's total output dramatically different from today. You'll want your local & national news, major sports, decent dramas, natural history docs, good radio. But everything else will be handed lock, stock & barrel to commercial tv as it struggles to make its business plan work.

Because, in the future, the commercial tv model has to change in the face of Netflix commercial-free streaming. Someone - Google, Apple or any other company sitting on a cash mountain - is going to buy Netflix soon. When that happens, the streams will become rivers. Commercials absent.

YouTube already handles live transmissions of events. No tv transmitters, minimal infrastructure costs. Pay a small fee and you get it commercial-free.

The future is wired to your home already. Get ready for the tidal wave that will change tv broadcasting forever.

In all of this, radio will live-on - but only if we fence-off a portion of the licence fee to pay for it. Commercial radio is already doomed and can only be saved if the BBC gets out of its face. There is no reason why all the music broadcasting of R1, R2, R3, R6, R1 Extra cannot be a commercial success - let commercial radio have them.

The licence fee structure must change. It is totally unreasonable to tax everyone who uses a tv tuner in this new age. It's bizarre that I have to pay for the BBC if I never watch it. But if I listen to its radio services, I pay nothing. When I travel the world, I can't use iPlayer (even though my licence fee pays for it) but I can still access all BBC radio through a web browser. And, I'm sorry ex-pats and others, but you should not be entitled to free BBC radio & tv just because you have a Sky card organised by your Spanish plumber.....

Lord Sugar, Knight of the Realm and Bad Grammar on Twitter, recently told "all Brits living in the USA - get this service now." He was plugging, several times over Twitter, a web-based service which gives you Freeview channels in the USA. This circumvents the BBC's policy in the USA and is a complete disregard for the concept of the licence fee. It is also, under UK law, a criminal offence. Not just a Knight of the Realm with responsibility to uphold our laws (fail), but a BBC artiste who makes substantial amounts from your licence fee (fail again). None of which sits at all comfortably with his position as Non-Exec Chairman of YouView - funded by UK broadcasters!

The times demand a change. UK broadcasters, wake up. UK Government - stop treating broadcasting as your convenient mouthpiece and revenue stream. Instead, inspire our industry to use the talents, skills, knowledge that it has acquired to lead to the future - rather than constantly being a follower of whatever comes out of the USA. There is no reason why Netflix could not have been a British idea, on British soil, protecting British jobs.

Instead our UK broadcasting industry is being torn apart by micromanagement, stultified by the smothering of creativity and experiment. It lurches from one financial crisis to another like a schooner with no masts in a storm, and then gets washed onto the rocks of politics where its hulk will rot. Too many useless, non-creative managers pursuing kingdom-building agendas at the expense of programme investment.

Netflix is the sub you can't even see yet.