BBC iPlayer Pre-booking functionality Explanatory Note

Issued November 2008

1

The Trust’s decision

After a 28 day public consultation, the BBC Trust has decided to approve BBC management plans for the addition of pre-booking functionality to the BBC iPlayer. Pre- booking will allow users to select programmes from the iPlayer schedule up to 7 days in advance and download them for viewing on their home computer. The Trust has also asked BBC management to report reach and usage data for pre-booking six months after pre-booking is launched on the BBC iPlayer. The Trust will make a public statement after it has considered the impact of this on the BBC iPlayer’s reach and usage.

Background

On 30 April 2007, the BBC Trust approved BBC management’s proposals for on-demand services with some modifications after subjecting them to a Public Value Test. For example, the Trust rejected some types of downloads, such as classical music and audiobooks. In its approval the Trust set out the scope of this new service as part of the Service Licence for bbc.co.uk. The scope of the on-demand service included provision for a seven day catch up service including series stacking, now launched in the form of the BBC’s iPlayer. The scope of the service, based on BBC management’s application at the time, did not include pre-booking functionality.

In May this year, BBC management sought the Trust’s approval to amend the terms of the licence to include a pre-booking facility. The Trust did not consider this change to be significant to the extent that a Public Value Test was necessary, but it wanted to provide third parties the opportunity to express an opinion. The Trust decided therefore to hold a 28 day public consultation about BBC management's proposal to add pre-booking functionality to the BBC iPlayer and launched this on 30 June 2008.

The consultation closed on 28 July 2008. We received two responses which we are publishing in full with their permission (see Annex B and C). In light of the consultation, we raised further questions with BBC management and we are publishing their response at Annex A.

This Explanatory Note sets out the reasoning behind the Trust's decision to approve the addition of pre-booking functionality to the BBC iPlayer. It also sets out why the Trust does not consider that this new feature constitutes a significant change to the BBC's UK Public Services and why it followed the process it did to reach its decision.

2 How the Trust has arrived at its decision

If the Trust decides that a proposed change to a UK public service provided by the BBC is a ‘significant change’, it can decide to launch a formal Public Value Test (PVT) assessment to ensure the public value obtained by such a change is not outweighed by any negative market impact. The Trust has decided that the addition of pre-booking to iPlayer is not a significant change. In arriving at this conclusion, the Trust has taken account of the four considerations set out in clause 25(2) of the Framework Agreement, as detailed below:

Financial implications

The Trust has considered the financial implications of the proposal and decided they are not significant and the cost is low. As provided in BBC management's proposal, the BBC's downloading costs are fixed and BBC management consider that the BBC will not therefore incur further downloading costs as a result of introducing the pre-booking functionality. As regards software development and roll out costs, BBC management has clarified that the physical infrastructure used for pre-booking is the same as for the BBC iPlayer and the only additional cost to implement pre-booking is approximately £30,000 The financial implications are therefore not significant.

Novelty

There is virtually no novelty in pre-booking, a feature that has been widely implemented on other platforms for some time. Pre-booking is simply an additional feature of the BBC iPlayer which allows users to pre-select a programme for download, currently up to 7 days in advance of broadcast. Although this is new functionality for the BBC iPlayer, it is not in and of itself novel when compared to other services available in the wider market.

Duration

The duration of the pre-booking functionality on the BBC iPlayer will, in principle, be unlimited. However, this alone does not mean it is a significant change, taking account of the other factors that we have set out.

Impact

Based on the information provided in BBC management's proposal, the further information provided by BBC management, and taking into account the issues raised by the respondents to the public consultation (set out below), we consider that the likely impact of pre-booking functionality is limited. The Trust considered, but rejected requesting a trial to establish usage and reach data because the costs involved outweighed those of implementing the service. However, owing to the inherent lack of data available in advance of launching this new functionality, we have asked BBC management to return to the Trust six months after launch to provide further usage and reach data in order for the Trust to review impact at that time. 3 Conclusion

Having taken into account the above considerations and the points raised during the consultation the Trust has approved the the addition of the pre-booking functionality to the BBC iPlayer. The Trust does not consider this constitutes a significant change to the BBC’s UK public services. In arriving at this decision, the Trust has also borne in mind its duties under the Charter and Agreement as well as regulatory requirements in considering BBC management’s application.

We have requested additional information on the impact of pre-booking when this is available. To that end we have asked BBC management to report to us six months after the feature is launched on the BBC iPlayer with information on reach and usage. The Trust will consider this information and make a public statement at that time. Key points arising during the public consultation

The two responses that we received during the public consultation differed in terms of their support for the BBC iPlayer pre-booking functionality. One of the respondents, the Audience Council for Wales, was supportive of the proposal and considered that it will increase value for money and will mean the BBC iPlayer provides a function available on other internet catch-up services. The other respondent, British Sky Broadcasting (“Sky”), queried the proposal as it currently stands and on the basis of the information provided by BBC management.

In this part of the Explanatory Note we provide details of how we have considered the relevant key points raised during this consultation, primarily by Sky. However, this Explanatory Note is not intended to address every point raised by the two Respondents. We also refer to BBC management's responses to further questions that were submitted by the Trust. BBC management's responses are also set out in Annex A to this Explanatory Note.

1. Access to pre-booking functionality by third party providers of BBC on-demand content

Sky queried whether the addition of the pre-booking functionality to BBC iPlayer should be subject to specific requirements on the BBC to "facilitate the simultaneous launch of the pre-booking functionality on other services and platforms which distribute BBC on- demand content." Sky also queried the responsibility of the BBC to support the introduction of pre-booking functionality on other platforms and services that distribute BBC content, for example, through the provision of advance BBC schedules and programme assets.

With reference to BBC management's proposal, the pre-booking function is only proposed in respect of the BBC iPlayer internet offering, as opposed to on-demand

4 content provided over cable television where audiences with DVR technology will have access to very similar functionality.

The syndication of BBC iPlayer content is primarily through links back to the BBC iPlayer and only in certain cases are partners permitted to host and serve BBC assets (when a partner is unable to link to BBC services, for example). Consequently, the BBC does not currently syndicate the functionality of iPlayer (as distinct from the content within it) on third party websites. BBC management has, however, recognised that it may be beneficial to licence fee payers to make pre-transmission BBC content available to syndication partners. We expect BBC management to comply with the Syndication Policy and guidelines in this respect.

As to whether the BBC is required to provide links to pre-transmission BBC content at the same time as it launches the pre-booking function on iPlayer, we do not consider it necessary to delay introducing pre-booking on the BBC iPlayer until such links can be provided to syndication partners. The Trust has reached this position taking into account the public value in offering pre-booking on iPlayer as soon as possible, that syndication arrangements are the subject of commercial negotiations between the Executive and third parties, the expectation that the likely impact of the pre-booking functionality on third parties that syndicate BBC on-demand content will be limited (see below) and the absence of evidence of any negative market impact caused by the introduction of the pre-booking functionality on the BBC iPlayer submitted in response to our consultation. The Trust does, however, expect the BBC to comply with the Syndication Policy and syndication guidelines and continues to monitor syndication arrangements by way of six monthly updates from the Executive.

2. Usage and reach of the BBC iPlayer pre-booking functionality

Sky also requested information as to the current usage and reach of the BBC iPlayer, as compared with the BBC’s previous projections, and how the usage and reach will increase as a result of the addition of the pre-booking functionality. Further, Sky raised concerns that the proposal fails to consider the impact that pre-booking would have on the use of the BBC iPlayer by consumers and consequently the impact on third party platforms and services that syndicate BBC on-demand content and, more broadly, other relevant markets. Relevant markets are taken to be DVDs and other VOD services as referred to in BBC management's proposal.

We submitted further questions to BBC management as to the anticipated effect of pre- booking on the reach and usage of the BBC iPlayer. BBC management's view is that pre- booking is more likely to increase usage of downloads via BBC iPlayer in terms of viewer hours than to increase the number of consumers actually using the BBC iPlayer (i.e. reach). Indicative figures provided by BBC management as to the current usage of BBC iPlayer as against original projections provided as part of the iPlayer PVT application show that usage is about half that expected. BBC management therefore consider that a

5 small increase in the usage of downloads via BBC iPlayer, as a result of the pre-booking functionality, is unlikely to result in the original BBC iPlayer projections being exceeded.

Further, BBC management consider that since pre-booking does not add to the reach of the BBC iPlayer, it is unlikely that suppliers of broadcast, cable and satellite services will be affected, any impact on the sales of PVRs is likely to be minimal, and it will not lead to diversion from other relevant markets. Since BBC management consider that pre-booking does not add to the reach of iPlayer, our expectation is that the impact on the current syndication partners of BBC content would also be limited. In light of the information provided by BBC management we consider the likely impact of the pre-booking functionality on the usage and reach of the BBC iPlayer as not significant. We have however asked BBC management to provide further information on the impact of pre- booking six months from launch and we will review this again at that time.

3. The effect of pre-booking on peak streaming rates

A further query was raised during the consultation as to whether pre-booking will address download times and the anticipated cost reductions for Internet Service Providers (ISPs). As outlined in the proposal and also in the response to the further questions submitted to BBC management, BBC management expect the addition of the pre-booking functionality to result in users adopting pre-booking partly in substitute for streaming and for it to reduce peak streaming rates. It is our understanding that with the addition of the pre- booking functionality, downloading will occur in the background whenever personal computers are on. As such, it is BBC management's view that it is likely that downloading will occur more at off peak times resulting in cost reductions for ISPs. BBC management also consider that their view is shared by ISPs.

4. Parental Guidance

The Audience Council for Wales questioned whether the Parental Guidance function would be available when pre-booking programmes. Parental Guidance is an option that is available on the BBC iPlayer and BBC management have confirmed that it will automatically be extended to pre-booking. Information required six months from launch

As outlined above, the Trust has asked BBC management to provide further information to the Trust six months from launch of the pre-booking functionality on the BBC iPlayer. Specifically the Trust has asked BBC management to provide:

(1) Assessment as to the effect that pre-booking has had on the reach and usage of downloads via the BBC iPlayer, including comparative iPlayer download data alongside the number of pre-booked programmes;

6 (2) Assessment as to the effect that pre-booking has had on the reach and usage of streaming via the BBC iPlayer, including comparative iPlayer streaming data alongside the number of pre-booked programmes;

(3) Assessment of the impact of pre-booking on each of the services identified by Ofcom in the iPlayer MIA with reference to usage data;

(4) Assessment of plans by other providers to launch pre-booking functionality and the likely impact of the BBC’s pre-booking service on these;

(5) With reference to usage data, an assessment of whether the launch of pre-booking elevates iPlayer into a more significant alternative to linear viewing.

The Trust will review this further information from BBC management, in particular in relation to the impact of the pre-booking functionality. If the Trust finds that the addition of pre-booking functionality has a significant effect on reach and usage of iPlayer, it can suspend pre-booking and may decide to subject it to a full Public Value Test. In any case, the Trust can request further data from the Executive and maintain a watching brief on the impact of pre-booking until it is satisfied as to the impact of pre-booking. It may also ask for pre-booking to be subject to further scrutiny when the BBC iPlayer is looked at as part of the review of the on-demand service scheduled towards the end of 2009.

7 Annex A

BBC management responses to further questions

A. Response to questions

1. Is the infrastructure to supply pre-booking functionality in place, or will it require additional spend (ie how easy would be it be to run a trial)? The physical infrastructure needed to offer pre-booking is the same as that used for iPlayer today, and therefore has no extra cost. We estimate the additional software development and rollout costs to be in the region of £30k.

2. Has any audience testing been carried out in terms of unattended downloads - what will users think of leaving PCs etc on overnight? No audience testing has been carried out specifically for pre-booking. Some users may choose to leave their PCs on overnight to facilitate downloading. Audience testing during the iMP trial and user behaviour in iPlayer suggests that immediacy of delivery is important to audiences. On this basis, if pre-booking is the only way to instantly access HD content (for example) it is possible that users will see the benefits of overnight downloads. However, the benefits of pre-booking can be realised without requiring users to leave PCs on overnight; downloading will happen in the background whenever PCs are on. Other off peak periods exist, such as weekends, when pre-booked peak time programmes could be pre-delivered days in advance.

3. What evidence is there that pre-booking will reduce peak streaming rates? This is hard to prove, but we expect pre-booking to reduce peak streaming rates because • Users will not stream while watching a pre-booked programme; and • We expect pre-booked viewing to peak at the same times as streaming. Our view is shared by ISPs and has been noted in the widely respected Telco 2.0 blog: “The BBC is planning to introduce a “bookmarking” feature to the iPlayer which will allow pre- ordering of content and hopefully time-of-day based delivery options. This is a win-win-win enhancement and we can’t see any serious objections to the implementation: for the consumers it is great because they can view higher-quality video and allow the download when traffic is not counted towards their allowance; for ISPs it is great because it encourages non-peak hour downloads; and for the BBC it is great as it will potentially reduce their CDN costs”

8 4. What is the evidence that audience behaviour will support pre-booking as opposed to 'anytime, anywhere' consumption via streaming? All things being equal, the evidence of iPlayer suggests that audiences do choose ‘anytime, anywhere’ consumption via streaming. However, pre-booking / downloading does have advantages: • The capability of internet connections varies considerably, making streaming not always possible, particularly for higher resolution content and for homes in remote areas. • Until mobile streaming is ubiquitous, downloading / (and therefore pre- booking) represents the only way for many to consume rich media on portable devices • Pre-booking, when combined with series stacking functionality, can be more convenient for users. In these cases, audiences will be able to watch pre- booked content immediately as if it was streamed.

5. What evidence is there that adding pre-booking will not materially increase the reach and usage of the iPlayer service? Can the Executive provide current reach and usage figures compared to the projected figures in the PVT application? Even after launch it will only be possible to estimate the impact of functionality like pre- booking on overall reach and usage of iPlayer. However, pre-booking is more likely to increase usage than to bring new users to iPlayer. We note that although reach so far seems to roughly as expected in the PVT forecasts, usage (i.e. hours viewed) has been about half what was expected. See below for an update on reach and usage compared to project figures in the PVT application.

6. What steps has the Executive taken to ensure adding this function does not affect providing content on a platform neutral basis (so far as allowed by VFM and technological considerations)? This will apply to both current syndication arrangements and future arrangements. Pre-booking functionality in no way impacts the BBC’s syndication policy. Decisions to syndicate content and functionality such as pre-booking are subject to the BBC’s syndication guidelines and monitored by the Trust on a six monthly basis. Syndication decisions are made on a non exclusive basis and subject to technical feasibility and value for money considerations. No decision has yet been made by management whether to make pre-booking functionality available to existing and future partners

9 B. Metrics update Summary • Usage: In terms of viewer hours, usage is below the PVA forecast by around 50%. Current trends suggest that over 2008 there will be around 100m viewer hours, whereas the PVA predicted 195m viewer hours • Reach: Current metrics (based on cookie-counted unique users) do not allow for a reliable, like-for-like comparison with PVA forecasts (expressed in 15-min consecutive weekly reach). However, direct comparison, made for indicative purposes only, suggests that average reach for 2008 will be just over the PVA model’s forecast, at around 1.4m users per week (versus a forecast of 1.27m). Panel- based data will be available in the coming months which will allow for a more meaningful comparison. Usage The PVA document does not provide usage forecasts for this year: it only does for 2012 (pars 7.3.5 and 7.4.1). However, appropriate figures exist the underlying model.1 The PVA model: For 2008, the model predicts 195 million viewer hours (and 1,898 by 2012). Current data: Estimates2 of actual monthly viewer hours are shown in Exhibit 1 below.

Exhibit 1: iPlayer observed monthly views (stream starts plus download starts) to date, and implied viewer hours.

1 Throughout this update, PVA figures have been shifted by one year to reflect the delay in iPlayer’s launch. Accordingly, all references made here to PVA forecasts for, e.g., year 2008 can be found in PVA document and/or model under year 2007.

2 Using the number of streams and downloads initiated, multiplied by an average viewing time of 22 minutes.

10 Implied viewer hours are calculated assuming average viewing times of 22 minutes for the case of streaming, Sources: MC&A (views), FM&T Distribution (average viewing time). Assuming that usage in June and July is representative of 2008 (which is reasonable in view of the chart above), leads us to expect that by the end of the year users will have viewed around 100 million hours – that is, around half of what was expected in the PVA. Regarding the pre-booking functionality discussed in the attached document, although (as noted) we expect impact on usage to be minimal, we note here that any small increase in usage is unlikely to cause iPlayer beyond forecasts. 3 Reach For reach it is more difficult to provide a like-for-like comparison between PVA forecasts and current figures. This is because the measure of reach given in the PVA4 is not being directly monitored at present, nor can it be easily extrapolated from the information that is available. However, it is possible to provide an indicative comparison using cookie-counted weekly unique users. The PVA model: The PVA model, (as well as figure 21, p 73 and par 7.4.1) predicts an average (weekly 15-min) reach of 2.1% in all TV households for the first year of operations (now 2008), and 19.8% by the fifth (now 2012). For 2008, multiplying 2.1% times 25.6m (TV households - BARB) times 2.3 (persons per TV households – BARB) yields 1.27m persons reached per week. Current data: Exhibit 2 below shows observed weekly cookie-counted unique users to date, averaged for each month: Exhibit 2: Observed weekly unique users to date. Source: MC&A, cookie-based

3 In terms of bandwidth used, this suggests that impact has been even less than 50% of what was modelled by Ofcom in its 2006 MIA, given that streaming users (who account for the vast majority of iPlayer usage) only download what they consume.

4 Weekly 15-min consecutive reach – see footnote 68 and Figure 21, p 73 in the PVA application

11

From Exhibit 2 it is reasonable to expect that the months of Apr-Jun will be representative of 2008, which suggests that average reach for 2008 will be around 1.4m – that is, slightly over the PVA’s forecast. However, these figures should be treated as indicative only, as cookie-counted reach is not in any way equivalent to 15-minute consecutive reach. Specifically: • Multi-user viewing would result in cookie-based figures being an under-estimate • Users accessing iPlayer from more than one computer in a week (e.g. from work and home) would result in an over-estimate Panel data will be available in the coming months5 that will allow for a more meaningful comparison with PVA forecasts.

5 The Nunwood New Media Tracker (recently commissioned, as a replacement for TNS)

12 Annex B – Submission by Sky

Response of British Sky Broadcasting Limited (‘Sky’) to the BBC Trust consultation on BBC Management proposals for the introduction of pre-booking functionality to the iPlayer

Summary 1. Sky cannot comment meaningfully on the BBC Management (‘the BBC’) proposals for the introduction of pre-booking functionality to the iPlayer (‘the Proposals’) due to the lack of information and robust analysis regarding their impact. For example, the Proposals fail to consider the impact that a significant increase in the amount and range of content listed in the iPlayer would have on usage, and rely on spurious and unsubstantiated assertions as to consumption of BBC programme to allege that the Proposals will have no impact. 2. The BBC Trust (‘the Trust’) should reject the Proposals on this basis alone, and should require the BBC to resubmit its application for approval with adequate evidence in support of any analysis as to their impact, which can then be put to stakeholders as part of a legitimate consultation process. 3. Any subsequent approval of the Proposals (following further consultation) should be subject to specific requirements on the BBC to facilitate the simultaneous launch of the pre-booking functionality on other services and platforms which distribute BBC on-demand content. Failure to do so would breach the BBC rules on the syndication of on-demand content and the Competitive Impact Principle. 4. If the relevant supporting data does not exist, then the Trust should consider approving a limited and time specific trial to generate the necessary data. Only then can the BBC make any statement as to the public value or market impact of the functionality. The results of any trials must be published in support of any future consultation to enable stakeholders to comment meaningfully.

1. The consultation is flawed 1.1 The BBC document setting out the description of the functionality, its public value and market impact fails to provide any basis for adequate consultation. The Trust should reject the application for approval on this basis alone. An explanation of the failings of the BBC’s proposals and assessment is set out below in more detail below in section 3. 1.2 Should BBC wish to pursue this functionality, the Trust should provide clear instructions to BBC as to the quality and detail of information and analysis required in order to enable the Trust to consult stakeholders in a meaningful and worthwhile manner. For example, although the proposals refer to recent survey evidence in support of the proposals, the BBC has chosen not to make the report by Human Capital available to stakeholders. Irrespective of the BBC’s perception of the relative importance of a particular proposal, it must be supported by an appropriate level of evidence and analysis. This is clearly lacking on this occasion and the absence of

1 Pre-Booking Functionality Sky Response

such evidence and analysis is a serious failing. One would anticipate that, had the Trust had such information, it would have been able to challenge many of the unsubstantiated assertions made by the BBC prior to publication of the proposals and consultation with stakeholders so as to avoid wasting valuable time and effort of all concerned.

2. Non-discriminatory access to BBC on-demand content 2.1 In the event that the Trust does subsequently permit the Proposals, the BBC is obliged by its Syndication Guidelines and the Trust’s Syndication Policy to facilitate the introduction of similar functionality across all platforms and services which distribute BBC on-demand content. Failure to support such functionality, for example through the provision of advance schedules and programme information, as well as advanced access to actual programme assets to facilitate efficient downloads, would be a breach of the guidelines and policy. 2.2 Furthermore, in the light of the BBC’s obligation under the Competitive Impact Principle, which requires the BBC “to endeavour to minimise its negative competitive impacts on the wider market”, the BBC must consider whether pre-booking functionality can be implemented on the iPlayer before it has enabled competing providers of BBC on-demand content to provide similar functionality.

3. The BBC’s assessment of public value and market impact are inadequate 3.1 As described, the BBC pre-booking functionality will operate as follows: a) iPlayer users will be able to “pre-order the download of a TV programme before it has been broadcast”; b) After the user has ordered the programme the corresponding file will be downloaded to the user’s computer at “the optimum time for the user, the UK internet and the BBC”, which may be before the scheduled (linear) broadcast of the programme, and therefore, before the programme is made available to view on an on-demand basis via the iPlayer or other user interface; c) The pre-booked and downloaded programme would only become available to view after the linear broadcast, and, it is assumed, at the same time as non-pre-booked versions would be available to view; and d) The rights window for a programme downloaded via pre-booking will be the same as if the programme had been downloaded on the day it is broadcast (see paragraph 7 of the BBC document setting out the Proposals). 3.2 The Proposals fail to deal with the fact that this description of the pre-booking functionality would result in a significant increase in the amount of BBC on-demand content being listed in the iPlayer (whether for immediate viewing using the streamed content, for immediate download or download at a later date).1 The amount of programming listed could double in volume. Instead of making available

1 Sky notes that currently the iPlayer lists schedules for three days in advance, marking content as either “Coming soon”, “Not available” or highlighted for immediate viewing if the programme is a repeat of a programme that is currently available to view due to an earlier showing. Although not the subject of this consultation, Sky is concerned about the use of repeats within iPlayer to extend the period within which content may be viewed beyond the “seven day catch- up” window agreed by the Trust. As requested in this response, the Trust should bring forward its review of the BBC’s on-demand proposals, and consider this as a matter of urgency.

2 Pre-Booking Functionality Sky Response

the previous seven days’ programmes, the iPlayer will list 14 days of programming which consumers can either select to download immediately, or over the coming seven days. No consideration appears to have been given to the impact that increasing significantly the volume of content available via the iPlayer will have, either from a public value perspective or with regard to the ‘market impact’. 3.3 Sky submits that the amount and range of programming that can be accessed via a particular interface, such as the iPlayer, are important factors in determining the usage of on-demand services by consumers. The greater the volume and range of content available from a single interface, the less likely consumers are to use other similar applications to search for and view on-demand content, or indeed watch other sources of programming, such as broadcast services. This is overlooked by the BBC assessment of the proposals, and is a significant shortcoming that prevents any meaningful commentary on the proposals. 3.4 Moreover, the BBC’s assessment of the public value and market impact of the proposals appears to comprise solely self-serving assertions which are not supported by evidence or analysis. Impact on public value 3.5 In relation to “Reach and usage of BBC content”, the BBC states that it “does not expect pre-booking to have an incremental impact on overall usage of the iPlayer service to the extent that it would require adjustment of the forecasts outlined when the service was first proposed” due to the fact that “[t]he overall level of consumption of BBC content is unlikely to change as a result of pre-booking, as consumers would watch these highly-valued programmes regardless, either live or through retrospective viewing using iPlayer’s catch-up”. 3.6 The BBC’s assessment is simplistic and unsupported by any published evidence of consumer behaviour. For example, this assessment fails to take into consideration: a) the increase in the volume and range of content that will be listed in the iPlayer at any one time; b) the comparative ease with which programmes may be pre-booked for viewing later against the inherent delay of the current downloading functionality which has driven consumers to prefer streamed viewing;2 and c) the likelihood that users will use the pre-booking functionality to create large, ‘automatically-generated’ (post-broadcast) libraries of downloaded programmes. 3.7 Furthermore, no attempt has been made to quantify the current reach and usage of the BBC on-demand content via the iPlayer as compared to the projections contained in the BBC PVT application,3 or how such use would increase were pre-booking to be

2 See BBC press release - http://www.bbc.co.uk/pressoffice/pressreleases/stories/2007/12_december/13/iplayer.shtml and Sky notes Ashley Highfield’s comment of 14 January 2008 that “Streams are outnumbering downloads by a factor of eight to one. I would imagine that eventually this might settle at one download for every three streams, especially when we have implemented bookmarking (pre- ordering of programmes to be downloaded, possibly ahead of transmission so that they are available in your "download manager" immediately after the programme has aired)….” http://www.bbc.co.uk/blogs/bbcinternet/2008/01/iplayer_launch_first_indicatio.html 3 See Section 7 of BBC Executive's application document http://www.bbc.co.uk/bbctrust/assets/files/pdf/review_report_research/pvt_iplayer/bbcexecutive s_pvtapplication_pva_annexg.pdf.

3 Pre-Booking Functionality Sky Response

permitted. Sky notes that the Trust’s PVT did not consider the impact of streamed on-demand content but rather of downloaded content only. Streamed on-demand content was only introduced to iPlayer distributed on-demand programming at the re-launch in December 2007 and may have contributed to a significant increase in viewing of BBC on-demand content as compared to pre-re-launch, in addition to the BBC removing the requirement on users to pre-register to use the service. No data has been provided analysing the difference these changes made against the usage forecast for the PVT, and the changes now proposed. 3.8 The BBC’s assumption that consumers would not watch more, or different, content as a result of pre-booking functionality because they are already watching all the “highly-valued” BBC programmes that they wish to through linear or existing catch- up services is not only counter-intuitive, but also unsupported by evidence. This assertion is also contradicted by later assertions in the BBC proposals that seek to emphasise the benefits that pre-booking will achieve (for example, it assumes that despite enhancing the consumer impact of the BBC’s online delivery interface, there will be no commensurate increase in usage, or as a result of improvements in “ease of use” and simpler user journeys (Paragraph 20 of the Proposals)). 3.9 The BBC’s assessment of “Quality and Impact” is nonsensical: “Pre-booking will enhance iPlayer’s consumer impact: trialists of the iMP prototype commented that the impact on their viewing behaviour would have been greater if download times had been shorter. Thanks to its immediacy, pre-booking will help address this shortcoming. … pre-booking does this without forcing users to compromise on image quality; this results in higher quality for the proposition as a whole.” 3.10 Pre-booking will not address download times, which are dependent on broadband download speeds and usage. Furthermore, pre-booking is not ‘immediate’ but relies on delaying downloading until a later date, and therefore risks confusing consumers who might think that they will be able to download a programme to view immediately, when the opposite will be true. 3.11 It is not possible to assess whether the “quality for the proposition as a whole” will be increased without information as to the current level of downloads versus streamed viewings and projections as to changes expected as a result of the introduction of this new functionality. This information is also necessary in order to comment on the BBC’s assertion that users will substitute pre-booking for streaming, resulting in a reduction in the BBC’s costs (see Paragraph 23 of the Proposals). Market impact 3.12 The BBC’s assessment of ‘market impact’ is similarly flawed, in particular due to the illogical and unproven assertion that pre-booking “cannot lead to any diversion of demand away from other relevant markets” due to the fact that audiences are already compelled to consume all the ‘high-quality’ BBC programming they can handle by any and all means available. 3.13 Indeed, according to the BBC, there is no correlation between the increased likelihood that a consumer will download a programme resulting from the introduction of pre-booking functionality, and the likelihood that they will actually watch the programme. This reasoning is also employed by the BBC to dismiss previous Ofcom concerns regarding substitution from broadcast services to internet TV services. No evidence has been provided to support this assertion or to deal with the potential for increased usage identified above.

4 Pre-Booking Functionality Sky Response

3.14 In addition, the BBC refers to an Ofcom consumer survey (without providing any further details of this evidence) in support of its assertion as to the relative unimportance of this functionality. This evidence appears to support the rationale for catch-up services, rather than any view as to the lack of requirement for pre-booking functionality as part of a catch-up service. Contrary to the public value assessment, in this context, pre-booking is considered to be a “minor piece of functionality” unlikely to drive usage. 3.15 Sky notes that the BBC has made no attempt to assess the impact of the Proposals on third party platforms and services that syndicate BBC on-demand content. Without any evidence as to current and forecast usage, it is not possible to comment meaningfully on such an impact, but it is logical to assume that were such functionality not available on other platforms and services (as appears to be proposed by the BBC), there would be some negative impact. The BBC’s failure to consider this aspect of the Proposals ‘market impact’ is a serious failure and may result from the apparent absence of any third party input into the assessment of the Proposals prior to publication. 3.16 Moreover, it is not clear upon what basis the BBC asserts that “watching pre-booked content on a PC will never be an exact substitute for watching content on a television.” This would appear to contradict Ofcom’s findings in its MIA and the BBC’s own assertions in its proposals which envisage a world of perfect substitution for BBC content between linear and on-demand services. 3.17 Furthermore, the statement that “[t]here will always been some circumstances when viewers will prefer to use the iPlayer in preference to watching pre-booked content via PVR (e.g. at work or when commuting)” would also appear to contradict the BBC’s assertions that use of online on-demand services does not increase viewing of BBC content (because someone viewing a downloaded BBC programme on a laptop, for example, might be watching a programme that they would not otherwise have had time to view, and will therefore have increased the amount of television programming they watch on a day to day basis as a result of that content becoming available to download). It is also of note that BBC appears to condone consumers viewing BBC on-demand content “at work”. This statement suggests that the BBC has information relating to usage that would suggest increased levels of viewing rather than the static picture it paints to support its contention that pre-booking will not increase demand. Without disclosure of such information, Sky cannot comment on the BBC’s proposals, and we are surprised that the Trust did not see the need for such information to be disclosed.

4. Reducing BBC on-demand bandwidth requirements 4.1 The BBC’s assessment of the impact of the Proposals on ISP costs is surprisingly cursory given the significance of this issue for ISPs, and the fact that it was raised as a concern by Ofcom in its MIA. 4.2 Sky would have expected the BBC to provide a more detailed assessment of current usage, and the anticipated cost reductions for ISPs should pre-booking be adopted and usage meet expectations. Without such information it is not possible to comment meaningfully on this aspect of the proposals.

5. Limited approval 5.1 If the BBC does not have the necessary information to support the Proposals (which Sky considers unlikely), the Trust should consider allowing a limited and time specific

5 Pre-Booking Functionality Sky Response

trial to generate the necessary data and to enable assessment of the impact of the proposals, particularly whether the functionality would lead to an increase in the volume of content downloaded and viewed by consumers. This information could then be disclosed as part of any future consultation on the functionality.

Sky 1 August 2008

6 Annex C

Memo

To: The BBC Trust - BBC iPlayer programme pre-booking consultation team From Audience Council for Wales Date: July 2008 Re: BBC iPlayer programme pre-booking Consultation

The Audience Council for Wales is supportive of the iPlayer pre-booking proposals and believes it will bring the service into line with other internet catch-up services (such as 4OD). The Council agrees it will provide another useful means for audiences in Wales to view the BBC’s content. iPlayer pre-booking will act as a simple and effective method of ensuring the content is delivered to the user’s computer and as outlined in the proposals, appears to be an easy, reliable method of ensuring content can be viewed. This is pertinent especially for the series booker, which will allow viewers to catch up on individual episodes which may have been missed and also offer the facility to book the whole series for the viewer to watch at their discretion.

Pre-booking is particularly important in the context of the BBC’s Welsh language television programming broadcast on S4C. The BBC’s Strategic Partnership with S4C enforces a 7-day exclusive transmission window for S4C and the Council believes that pre-booking programming through the new system would ensure that viewers of BBC Cymru Wales’ programmes broadcast on S4C were not put at a viewing disadvantage. The 7-day delay could result in people forgetting to download by current means, whereas the pre-booking system guarantees the programme will automatically arrive on their computer.

Although a Parental Guidance option is available on iPlayer, the Council is eager to ensure that this is extended to pre-booking to ensure that children are not accessing content contrary to the wishes of their parents.

The Council agrees that introducing pre-booking will increase value for money. If the proposals are approved, audiences in Wales will have yet another means of accessing BBC content. ***