Elodie is 2 years and 9 months old and is already irritated by perhaps the biggest strategic issue haunting the BBC and Channel 4.

“I want the Peter Rabbit with the flying machine. Where is it?” Elodie is in front of the television and staring at me grim-faced.

I scroll through the Peter Rabbit options. “I am afraid it isn’t on iPlayer any more. It’ll probably be back soon.”

“Why can’t I watch it now?” The last word is somewhere between a wail and a shout. It doesn’t feel like the right time to discuss UK television rights.

Elodie doesn’t have this problem with Spirit on Netflix, a brilliant, animated series about the adventures of a young girl and her wild horse in frontier America made by Dreamworks. Lost in Oz on Amazon Prime, where Dorothy and her dog Toto have wild, magic adventures in Oz is always there. This problem is just with Peter.

Spirit-and-Lost-in-Oz

Elodie also loves dinosaurs. We can always watch Walking With Dinosaurs, the ground-breaking BBC series made almost 20 years ago, but still as powerful as ever. But that’s because the series is on Netflix (for which we pay less than the licence fee). Confusingly, only small segments are available on iPlayer.

Elodie has been born with the most basic rule of the digital age embedded deeply within her: programming that she wants should be instantly accessible. There is no reason why it shouldn’t be. The only barrier to immediate viewing is Mum and Dad and there is normally a way around those malleable obstacles.

When Channel 4 launched in 1982, its mission was to challenge the conventions of UK television and to build the strength of the independent production sector. Momentum led to the Broadcasting Acts of the 1990s setting quotas of programming that public service broadcasters had to buy from Independents and in 2004 the landmark Terms of Trade which gave independent producers significantly more power over the rights to programming ideas they created and, in 2006, to the digital rights as well.

The balance of power between public service broadcasters and Independents was fundamentally changed. It helped grow a vibrant and powerful independent production sector. Independent production companies became more valuable than ever before and many producers became rich beyond their wildest dreams in a series of consolidating buyouts. All3Media, for example, made 16 acquisitions over a dozen years before being bought by Discovery and Liberty Global for a billion dollars. Shine made 8 acquisitions before being merged with Endemol and being bought by 21st Century Fox, which is now to be part of Disney. The Independents have become powerful, rights owning assets.

But now the world has changed. When the legislation was put together, nobody imagined that, a dozen years later, satellite television would have moved from a fast-growing, powerful machine to become a threatened cash cow or that the future of television may be dominated by a handful of massive, global subscription video on demand (SVOD) players who own – or have access to – the most powerful libraries of content in the world. The growth of Netfix, Amazon and the far smaller Now TV in the UK is phenomenal as you can see below. Over 900,000 UK households took up a subscription in the last quarter alone.

Subscription-VOD

Owning quality TV rights and lots of them is essential if you are to be successful in this new, highly lucrative, global market – selling VOD television subscriptions packages. Netflix and Amazon currently dominate this market and are fast building their own potent archive of original programming. They will soon be joined by Disney, powered by its own rights and the addition of the substanstial 21st Century Fox archive.

Already 42% of UK households have an SVOD package. As three global players build ever more powerful always-on archives of content that match and often beat the quality of our domestic public service broadcasters, what level will that reach? 75%, perhaps?

So where does this leave the UK’s broadcasters? In that difficult position where the threat is great but too far away for politicians or regulators to feel the pressure to act.

Let me leave you with a few questions but before I do let me declare my prejudices. I believe public service broadcasting has an enormously positive impact on the quality of media in the UK and genuinely educates, informs and entertains. Netflix and Amazon make some brilliant original programming and their packages are good value for money. But they have American culture and attitudes at their heart and I want to see equally influential and high-quality programming reflecting our own culture and attitudes. Public service television was such an important part of my own childhood (as was Starsky & Hutch) and I want to see the same mix in Elodie’s life.

This leaves difficult questions to face up to.

Q1. VOD services are already important but will be critical in the future. Netflix always works but All 4 is a volatile beast. iPlayer is clunky. Perhaps this is unsurprising when Netflix spends 22% of the total revenues of the BBC and Channel 4 combined on technology development. How do our public service broadcasters remain competitive in technology when their traditional remit is programming and content?

Q2. The PSBs will need more control over programming rights if they are to ever create on-demand access to an archive of programming that comes close to what the new global players offer. Netflix, Amazon and Disney will become the benchmarks against which other services are measured. Is government and OFCOM willing to change the balance of power, taking away some of the power (and value) of the Independents and giving more back to the broadcasters?

Q3. Is there any hope of a UK based global SVOD player emerging? It is possible to imagine a combination of the UK’s broadcasters and a re-working of the regulatory structures that creates a global SVOD proposition? Sadly, I cannot imagine it.

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About Tim Ewington

Co-founder of Shortlist Media. Previously co-founder of media strategy consultancy, Human Capital. Still innovating, consulting and investing.
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