BBC Worldwide, the commercial arm of the British Broadcasting Corporation (BBC), is now eyeing the fast-growing consumer market in Asia as it expands its global reach. Its chief executive John Smith talks to GlobeAsia about emerging media trends and how the company hopes to entertain Asia’s rising middle class.
It has been billed as one of the most successful reality TV shows on the planet. In America alone, Dancing with the Stars draws a weekly audience of 25 million viewers, all wishing that they too could dance just like stars.
The worldwide reality show made its appearance in Indonesia this year on local channel Indosiar under license from BBC Worldwide and is proving to be a huge hit. The show follows in the footsteps of other major television shows that have gone global but were originally produced by the British Broadcasting Corporation (BBC) and marketed by its commercial arm, BBC Worldwide.
The strategic shift from focusing on its domestic market to targeting the fast-rising middle class in Asia has paid handsome dividends for the company. Over the past six years, BBC Worldwide has doubled in size and quadrupled in turnover, says chief executive John Smith.
The company booked total revenue of 1.1 billion GBP ($1.75 billion) in 2010 and a profit of 150 million GBP. While the United States is still its biggest market, followed by Australia, Asia is where its future lies.
In Jakarta for the first time recently, Smith admits that BBC Worldwide is just waking up to the potential that Asia, and Indonesia, offers to global media companies. It currently has no presence on the ground in Indonesia but he says he hopes to change that situation soon. “Asia has 60% of the world’s population and 64% of the world’s middle class,” says Smith. “Of the 22 countries that make up the continent, 12 have significant media industries.” The company is adopting a multi-pronged strategy for its push into Asia.
As with Dancing with the Stars, it hopes to market more of its shows in Asia or jointly re-produce some of its most successful shows with local television channels. Indosiar, for example, produces the show under license with a local flavor.
“We do not have a presence in Indonesia currently but it won’t be long before we do,” says Smith. “Research has proven that 80% of all viewing in almost every country is locally made so we have to find a way to make programs in Indonesia.”
This is especially so as with 1.1 million pay TV households out of a population of 240 million people, the penetration is still very low. “Getting in early is critical because as penetration from pay TV grows, we will grow with it.”
The second part of the growth strategy is to develop more channels such as BBC Knowledge, BBC entertainment, CBeebies and BBC World News and offer these channels to local distributors.
Third, the company wants to expand its distribution network. “We have a catalogue of 50,000 hours of programming which makes us one of the largest distributors in the world,” says Smith. BBC Showcase, for example, is the world’s largest show by a single broadcaster. It recently launched in Korea and China.
The fourth leg of the strategy is centered on merchandising that complements its programs. These include DVDs, magazines, books and TV games for its successful programs, such as Top Gear. The package now incorporates a TV program, a magazine, computer games and live events.
Smith recounts the experience with Top Gear material being loaded by Facebook fans of the program. “We found out that many of these fans had unofficial material so we decided to load official material and the number went from 800,000 to 12 million with 250,000 new additions every month.”
Recognizing the phenomenal growth of online games, BBW Worldwide launched a games division to meet this growing demand. The company has developed an app for its Lonely Planet material, for example, to cater to travelers. To date 12 million have been downloaded. “What we did not realize when the iPhone came along was the growth of apps so now we are doing more on this front,” says Smith.
Partnership with Sega
Perhaps BBC Worldwide’s most ambitious plan to date is its partnership with entertainment technology company Sega Corporation to develop two huge theme parks in Japan and the United States based on its award-winning program BBC Earth.
The idea is to create a unique experience that fuses nature with technology so that visitors can “experience” mother nature using their eyes, ears, hands and minds. “We are using the special qualities that the BBC brand has and apply to that our range and scale of different markets to make money out of it,” says Smith.
Given the enormous opportunities in the region, BBC Worldwide has decided to appoint an executive vice president for Asia and put some “proper investment behind it.” Smith notes that with technology, the manner in which programs are delivered today is irrelevant as viewing around the world is going up.
“Demand for quality content is going up, not down,” he says. “The point is to have great content and find a way to get the content to the audience.” New technology will create new opportunities for media companies which can grasp these emerging markets.
The global online video game market, for example, is worth $70 billion a year and still growing. As disposable incomes in Asia rise, more people will spend more and brands will become increasingly important. Understanding this pattern of consumer behavior, the BBC now runs its business as if it is a house of brands, not just a television company. GA