BBC & Channel 4 Reveal How Growth Of Netflix & Amazon In The UK Has Lead To Rising Production & Talent Costs

British broadcasters BBC and Channel 4 have revealed that the rise of SVOD services including Netflix and Amazon has lead to rising production and talent costs in the UK television sector.

The rising cost of drama production has been laid out by both broadcasters in their submission to the House of Lords Communications Committee Inquiry on Public Service Broadcasting In The Age Of Video-On-Demand.

C4 highlighted the fact that the average budget for its drama has risen by over 100% in the last few years from £725,000 per hour in 2013 to £1.5M in 2017. “This is particularly driven by an increase in costs of production crew, as a result of increased demand and high tariffs from other content producers,” it noted in its submission.

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The broadcaster added that it responded to these increased costs by co-producing with international operators, including with the likes of Netflix. However, it added, “We do not believe it is appropriate for Channel 4 to develop co-productions for all its titles, given the likelihood for co-producers to want stories that are likely to have a more global appeal, and we believe it is important that UK-specific stories do not get diluted. We also know that longer-term concerns have been raised by high-profile talent such as Peter Kosminsky about whether we and the other public service broadcasters are becoming increasingly priced out of the market, particularly in genres like drama.”

Netflix and Amazon’s European growth has also caused issues with the demand for skilled production crew and studio space. C4 said that the SVOD services “should play their part in addressing” this and called for these companies to “commit to some level of transparency and reporting of their activity in the UK”.

Similarly, the BBC claimed that the SVOD services “may present long-term challenges to the established business models for producers” in the UK as well as an increase on talent costs. “The changes in the market have resulted in more fluidity across the sector in terms of talent. Talent development and idea creation is essential and, with the increased opportunities available from SVODs, the cost of talent, on and off screen, has inflated,” it noted.

The BBC has been increasingly co-producing its scripted slate with the SVOD with titles including Neil Gaiman’s forthcoming adaptation of Good Omens with Amazon.

“Co-production investment has been an important source of funding for the BBC’s programs. It has helped us to continue to commission programs which, due to significant cost inflation, might not be possible for the BBC to finance alone given constrained public service budgets,” it wrote. “However, working with SVODs presents the BBC with challenges, including the risk that the BBC and other PSBs are cut out of future opportunities as SVODs increasingly seek to fully fund commissions, working directly with established talent and producers.”

The issue of attribution has also come up again. Channel 4 has been particularly vocal on this topic with its Netflix co-production The End Of The Fxxking World, which it noted was “commonly perceived by both press and audiences as being a Netflix ‘Original’ show”. “The importance of retaining brand attribution is a key strategic focus for Channel 4 going forward, and we are investing significantly in marketing to ensure that our programs and our brand cut through with audiences. Where we negotiate co-productions directly with the SVOD platforms, we are ensuring that our brand stings are ‘burnt in’ to the beginning of shows once they appear on these services and the programming tiles that viewers scroll through attribute the shows to us,” it added.

While series such as Derry Girls and Catastrophe are described as ‘original’ SVOD shows, “despite merely being an acquisition”, it noted that as a public service broadcaster it had to following formal reporting requirements as to what is original versus acquired content. “It would not be possible under this regulatory regime to classify acquired shows such as Homeland, The Handmaid’s Tale or The Good Place as ‘Channel 4 Originals’ just because we have the UK rights to show them,” it noted.