BBC Studios, the BBC’s main commercial arm, has returned £1.9 billion (€2.2bn) to the BBC by substantially growing its income and profits – reaching £1.8 billion and £202 million in 2023-24 – but needs to continue to evolve in a dynamic market to meet ambitious growth plans, a new National Audit Office (NAO) report has found.In 2023-24, BBC Studios’ income and profits dropped, partly as a result of challenging market conditions, including a global slow-down in content spend and fewer programmes being commissioned, as well as high-value contracts coming to an end the year before.Investment in digital services such as BBC.com, U (formerly UKTV Play) and BritBox International also reduced profits in 2023-24. These investments are part of BBC Studios’ response to global audiences moving away from traditional broadcast TV to on-demand streaming services.The independent public spending watchdog’s latest report found these challenging market conditions could impact BBC Studios’ ambition to double its size between 2021-22 and 2027-28.BBC Studios’ growth plans involve exploiting existing successful key brands and IP, such as Doctor Who and the animation series Bluey; the production of more content for non-BBC third parties; and a larger share of income and profits to come from digital and streaming services.Global streaming companies have become increasingly prominent commissioners of BBC Studios’ content. This has led to an increase in the number of BBC Studios’ productions undertaken on a ‘work for hire’ basis where the IP and distribution rights are retained by the streamer – approximately 30 per cent of BBC Studios’ production income between 2022-23 and 2023-24.While ‘work for hire’ can be highly profitable to BBC Studios in the short to medium term, this does not generate longer-term returns through the sale of distribution rights, notes the NAO.Although BBC Studios has diversified its production income, as part of a mixed portfolio of production work, it has not yet met its targets for generating new IP. BBC Studios continues to stress the importance of generating new content, but it remains reliant on the IP from BBC programmes created before the 2018 merger. Of the ten titles from its production business which provided the most profit to the BBC in 2023-24, only one was from new IP generated by BBC Studios.While BBC Studios exceeded its income and profit targets to date, the BBC has not updated its published financial targets for BBC Studios, despite significant changes to its business model and the market in which it operates.To meet its ambition for doubling the size of the business, the NAO recommends that the BBC and BBC Studios take the following action:
- The BBC should ensure that BBC Studios’ strategic plans for delivering the growth ambition continue to evolve to reflect market developments
- BBC Studios should review the risks associated with not meeting its targets for generating new BBC Studios-owned IP
- BBC Studios should improve the consistency and effectiveness of its internal performance reporting.
“Following its merger with BBC Worldwide in April 2018, BBC Studios has succeeded in delivering increasing returns to the BBC,” commented Gareth Davies, head of the NAO. “Realising its ambitions for continued growth in turnover and profit will mean successfully navigating a rapidly changing and highly competitive global market. Key to this will be developing new high performing content for which the BBC owns the intellectual property.”
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