He didn’t name them, but those competitors are Netflix and Amazon which have in a relatively short space of time, elbowed their way into the TV market. From Stranger Things and The Crown on Netflix to The Grand Tour and Transparent on Amazon Prime, online-only shows have become core components of what we watch.
But while both Netflix and Amazon have invested heavily in content, it was the quality and simplicity of their technology that provided the foundation of their success. iPlayer may have led the online TV revolution, but it has since fallen behind in features and usability.
Hall is obviously aware of this, but for all his ambition, there are a host of reasons why the BBC will find it difficult, if not impossible, to make iPlayer as good.
The first problem is data, which is vital in getting personalisation and recommendation right. Netflix has more users globally – upwards of 86 million and growing – whose viewing habits help refine its systems. Amazon has data from across its retail and other businesses that has already made it a leader in recommendations (it has also sold millions of Amazon Echos, which gives it a big lead in the voice recognition tech that the BBC wants to add to iPlayer).
But much of the time, the BBC doesn’t even know who is watching. Unlike with Netflix and Amazon, there is no required sign-in for iPlayer. The BBC is trying to persuade people to use a single sign-in system called BBC ID, which would let it personalise and recommend content across all its platforms. There are plans to make sign-in compulsory but no set time frame and doubts about whether it will be possible across all the platforms iPlayer needs to be on.
And then there are the technical challenges of making any radical changes to iPlayer. As a publicly funded, public-service broadcaster, the BBC has a duty to be available as widely as possible. That means making sure iPlayer is compatible with services such as Sky, Virgin and YouView, plus smart TVs and many other devices.
Adding new features or even making the way video is delivered more efficient risks breaking earlier versions or making it incompatible with older devices and services.
And here, the BBC is a victim of its own success. Not only is it funded by the licence fee, but it has also become a cornerstone of British culture. That may make it a well-loved institution but it also means if iPlayer suddenly stops working on your two-year-old smart TV half way through Strictly Come Dancing, you’re going to be a lot more annoyed than if you have to switch over to your laptop to finish the latest episode of The OA on Netflix.
And not only does the BBC have extra hurdles to overcome, it also has less cash to do it.
Netflix’s research and development spending in 2015 was $650.8m (£530m), more than five times the £105m the BBC spent on development and its research department in 2015/2016. Amazon doesn’t break out its R&D, but as of the end of its 2015 financial year it had more than $620m in tax breaks, and said this was primarily what it spent on research.
Meanwhile the BBC is facing budget cuts amounting to more than £700m (some of which will be offset by increases in licence fee funding). It simply can’t match the cash the digital behemoths are willing to spend.
Yet there is one thing that gives the BBC an advantage over its digital-only competitors that might be more important.
While Netflix and Amazon have huge budgets to pay for shows – it is estimated they will spend a combined $9bn on content by 2020 – the BBC, through a combination of established relationships, long-running series and the fact it still broadcasts live to millions, retains an appeal to producers that is hard for the tech firms to match. It also still makes its own shows, and is for the most part pretty good at it.
That Netflix and Amazon are prepared to spend so much money on acquiring content underlines the fact that it’s what you watch, not how you watch it, that matters. And when it comes to what people want to watch, for the moment at least, the UK wants to watch a lot of what’s on iPlayer.
‘Choose Facebook, Twitter, Instagram,” says Renton in T2Trainspotting, in his update of the famous “choose life” speech from the original film. For Sony Pictures, which released the movie and saw the value of its film division written down by $1bn (£800m) last week, that is exactly the problem: too many consumers are choosing the digital lifestyle.
The owner of Columbia Pictures cited an “acceleration of market decline” in people buying DVDs and Blu-ray discs, brought about by the global boom in streaming and on-demand viewing on services such as Netflix, Amazon Prime and iTunes. It is a crisis Sony shares with its Hollywood peers. In the UK and the US, revenue from streaming and downloads of films and TV shows passed sales of DVDs and Blu-ray discs for the first time last year.
“Streaming is a problem for all the Hollywood studios,” says David Hancock, an analyst at IHS Markit. “There is more value per unit for a studio in the sale of a DVD than in providing a film or TV show” [to a service like Netflix]. “Growth in the digital retail and rental market is not compensating for declines in the physical market, which have been falling for a decade.”
Sony also referred to reduced profitability projections for its future films, after a year in which the Japanese-owned studio presided over several flops. Those include the all-female reboot of Ghostbusters and the genre-crossing Pride and Prejudice and Zombies; even the usually bankable Tom Hanks couldn’t save the day, as Inferno, the sequel to The Da Vinci Code, failed to spark.
But studios can have one bad year and come bouncing back the next. It is long-term factors that have underpinned the decision by Sony Corp, which bought Columbia in the mid-80s, to write down the film unit’s value. Those factors include a golden era for TV programming. As well as launching streaming services that have hit DVD sales, Netflix and Amazon are pouring billions into high-quality drama like House of Cards and Transparent. Traditional broadcasters such as Game of Thrones maker HBO and Sky, which produces Fortitude, are also investing heavily in high-end shows.
Sony has tapped into this trend too. Its own TV division, which is part of Sony Pictures and has been in better health than the movie studio, has co-produced with Netflix the £100m drama The Crown and Moulin Rouge director Baz Luhrmann’s troubled The Get Down.
Netflix and Amazon Prime have at least boosted demand for film rights, but the growth of original programming is a problem, according to Richard Broughton of media research firm Ampere. “Although the home entertainment market as a whole may be growing there is evidence to suggest that a big chunk of that growth is not necessarily flowing back to the same companies it used to. The abundance of high-quality TV, for instance, acts to boost competition for entertainment time and spend,” he says.
While all of Hollywood’s “big six” studios – Sony, Warner Bros, Disney, 20th Century Fox, Universal and Paramount – are facing the same issues, it is the smallest players that are feeling the squeeze.
In 2012, Sony was the biggest studio in the world’s biggest market, the US, with more than 16% share of the box office thanks to Skyfall and The Amazing Spider-Man. With few bona fide hits since then, that share shrunk to just 8.4% last year, a distant fourth. Sony’s lack of hits is in stark contrast to Disney, which became the first studio to take $7bn at the global box office last year, thanks to billion-dollar blockbusters including Star Wars: The Force Awakens, Captain America: Civil War and Finding Dory.
“Sony’s woes are partly because of the types of film they have been trying to invest in,” says IHS Markit’s Hancock. “Disney and Fast and the Furious-maker Universal have had several good years. Disney started its strategy a decade ago, buying up valuable franchises and companies such as Pixar, the Marvel universe and Star Wars. There is room for the biggest two or three players in this kind of market but it is much more difficult if you are fourth, fifth or sixth.”
In recent years the major studios have moved to releasing fewer, but bigger, films. Combined with the growth of international markets such as China, this has put a premium on globally recognised franchises such as Star Wars and remakes of famous titles. According to box office analysis firm Exhibitor Relations, Hollywood will produce around 40 sequels or reboots this year.
“With studios releasing fewer films there is more to lose from any given film failing to perform well at the box office,” says Ampere’s Broughton. “So this results in a model of safe bets and has contributed to the importance of franchises. Big hits are key for studios in order to maintain the profitability of their titles in deals with digital services such as Netflix and Sky.”
Sony has said that despite its difficulties it has no plans to sell its film operation. The writedown caps a difficult few years for the studio, which was humiliated by a cyber-attack in 2014 and whose chief executive, Michael Lynton, stepped down last month to become chairman of Snapchat app-maker Snap. The chief executive of the entire Sony group, Kazuo Hirai, is reportedly planning to spend two weeks a month at the film and TV unit’s Culver City base in Los Angeles.
Sony’s woes have not dissuaded Dalian Wanda, the property and media group controlled by China’s richest man, Wang Jianlin, from entering the market. Last year it paid $3.5bn for Legendary Entertainment, producer of films including Jurassic World and Godzilla.
Wang, who has made much of his desire to take on Disney’s theme park business, has not been put off by Tinseltown’s uncertain digital future. But could he be making the same mistake as the Japanese conglomerate?
“I don’t think they are making a bad bet because you are talking about taking control of high-quality media assets,” says Broughton. “But it is extremely expensive to buy in the US at the moment with the strength of the dollar. Strategically it does make sense if Dalian Wanda wants to take advantage of Hollywood expertise and take that to one of the world’s largest cinema markets, where they have a vast cinema chain business.”
Consumers, however, will continue to make choices that pose a long-term threat to Hollywood.
BRITISH STUDIOS STRETCHED BY SUCCESS
Stars of the big screen will descend on the Royal Opera House in London this month to celebrate the year’s best films at the Baftas. It will be a glittering occasion, yet behind the scenes the UK’s film and TV industry is being stretched to the limit by a talent shortage and lack of studio space.
While Netflix and Amazon are not in the running for gongs on 12 February – their time will come at Bafta’s TV awards in May – the impact of their British productions is being felt across the industry. Netflix’s £100m co-production The Crown has tied up resources, while Amazon is looking to increase its UK commissions after giving the green light to eight British shows so far, including comedy hits Fleabag and Catastrophe.
From actors and producers unavailable because of packed shooting schedules to a dearth of special-effects creators and craft skills such as wig- and dressmakers, the domestic entertainment sector is struggling to keep up with the resulting production boom.
“There are shortages with directors, producers, script editors, location managers, hair and makeup, and camera people,” says Jane Saunders of Creative Skillset, the industry body that supports training in the creative industries.
This shortage extends to studio space. The Crown, with a second season under way, has booked out about half of Elstree Studios for two years. The production has semi-permanent sets including parts of Buckingham Palace and Downing Street. Other films, such as Paddington 2, had to use alternative studios.
The UK film production industry has flourished over the past decade following a 25% tax break for foreign film-makers, mostly exploited by Hollywood studios making productions in the UK. However, the introduction more recently of a similar tax break for high-end TV drama – shows that cost at least £1m per episode to make – is now exacerbating the talent shortage.
Netflix and Amazon have joined the likes of HBO, which has made Game of Thrones in Northern Ireland since 2010, in jostling with film companies for talent.
“While it is fantastic to be so in demand, it has caused problems because talent is increasingly spread very thin,” said Kate Harwood, managing director of Euston Films. .
While the main show might have been the actual game and the sideshow might have been Lady Gaga’s performance, the moments in-between allowed for the studios and networks to tease their big bets for the year. At a reported $5m a pop they don’t come cheap, so each brief spot is packed to the gills with money shots.
Here are the big new trailers that dropped this year:
Ghost in the Shell
The majority of column inches devoted to Paramount’s big budget manga adaptation have been focused on the controversial decision to whitewash the Japanese source material by casting Scarlett Johansson in the lead. The latest spot does little to assuage any fears given that ScarJo’s cybernetic human is still the whitest person in Japan. There’s some fancy imagery at play (her face, that geisha) but it’s got a slightly dated post-Matrix knockoff vibe. Plus, ermmm, it is from the director of Snow White and the Huntsman.
Transformers: The Last Knight
The Transformers franchise has made more than $3.7bn at the global box office. Let that sink in. Because despite critics saving their best insults for each new installment, fans have continued to make the films profitable, which has led us to this dark place: awaiting a fifth feature-length fight between robots. Mark Wahlberg returns and is joined by Anthony Hopkins, who might just be lost, and from this spot, what looks like a vague attempt at political allegory!
The Handmaid’s Tale
Get ready for a barrage of “this is the show we need right now” headlines come April when Hulu’s ambitious retelling of Margaret Atwood’s grim dystopian drama hits. The story of an extreme Christian movement overthrowing the government and taking away all of women’s rights is certainly timely, and this new spot hints at a loyal adaptation, bleak and clinical yet still packing an emotional punch. It’s also a worthy showcase for two of television’s finest female actors: Elisabeth Moss and Samira Wiley.
For those who felt shortchanged by Interstellar, The Martian, Gravity and Passengers all being set in space but having precisely zero aliens between them, this year has not one but two films to set this straight. Before Alien: Covenant tries to repair the damage of Prometheus, Ryan Reynolds and Jake Gyllenhaal will do battle with a nasty little thing in this eerie new sci-fi thriller. The spot continues the sterling work of the initial teaser and all but guarantees that in cinemas, everyone will be able to hear you scream this summer.
John Wick 2
The inexplicably popular hitman thriller with Keanu Reeves as a super assassin gets a flashy sequel bringing back Reeves and reuniting him with Matrix co-star Laurence Fishburne. It looks like more of the same from this but with even more guns and a Fifty Shades Darker parody that helps to position this as perfect counter-programming for single people who are in the mood to watch carnage.
Pirates of the Caribbean: Dead Men Tell No Tales
Fans weren’t 100% sure if there would be a tease for Disney’s big budget sequel, but it’s landed and gives us the first look at Johnny Depp back in character. It looks a bit more spectacular than usual, but Depp is on quite the losing streak so it’s questionable whether there’ll be enough of an appetite for this.
Yep, one of the Marvel films but thankfully this is looking a tad different from the rest. Another Wolverine film as well, but one for grown-ups with an R rating and reports of graphic violence and a grittier tone. It’s Hugh Jackman’s swansong as the character but you can expect a reboot within months.
Quite possibly the trailer that will have the most people tweeting this year is an early look at the second season of Netflix’s breakout hit. It looks like they’re going for the Alien rule of doubling up for the second chapter with an increase in the horror element and what looks like a giant monster in the creepy final shot. Plus the kids in Ghostbusters outfits. It’s probably spawned 15 BuzzFeed lists already.
Guardians of the Galaxy Vol 2
Arguably the only Marvel franchise to still warrant much excitement, the Guardians sequel hits this summer with sky-high expectations. The new spot reminds us of the key characters, uses some rock music and does the job quite nicely. If audiences can battle through superhero fatigue, it could be the season’s biggest hit.
The Fate of the Furious
How did we get here? Well, in an obnoxiously fast car, of course. But yeah, here’s a look at the eighth installment of the Fast and Furious franchise. The twist this time is that Vin Diesel’s character has gone rogue and somehow managed to get Oscar winners Charlize Theron and Helen Mirren to come watch. It’s as impressive as it needs to be, and at least we’re finally getting our first submarine stunt of the series.
A Cure for Wellness
“Are you tired of not feeling well?” – a parody of a medication ad here for this loopy new horror film set in a wellness center. It’s a smart way of selling it, ridicules the often staggering list of side effects listed in a drug ad, and leaves us with the rapid selection of creepy cuts that we expect from the genre.
While a Baywatch movie might seem like the dictionary definition of unnecessary, this summer take on the cheesy show is going the 21 Jump Street route, meaning that it might actually be fun because it knows it’s unnecessary. Frustratingly, the jokes here have mostly been shown already in the main trailer, which is a worrying sign that, well, maybe that’s all they have.