DIGITAL MEDIA

Digital Media aims to use the web to reach existing and potential fans of BBC content across the globe. It achieves this through a combination of BBC-branded sites and partnerships with major players in the internet, mobile and video-on-demand (VOD) sectors. Digital Media ended 2006/07 with revenues of £13.9m and a loss of £(3.9)m, compared to sales of £13.3m and a loss of £(1.6)m in the year before. The increased losses reflect the fact that during the year, Digital Media invested in two key propositions - bbc.com and a commercial media player - which will define BBC Worldwide's presence on the web internationally and in the UK respectively. In parallel, the business concluded a series of VOD, web distribution and mobile deals with operators around the world. The most important of these was a global partnership with YouTube, with BBC Worldwide and the BBC becoming YouTube's first major broadcast partner outside the US.

During 2006/07 the business was also reorganised so that its activities fitted more closely with its business development remit, and Music and Audiocall were transferred to BBC Worldwide's Home Entertainment business (see p 26). Multimedia activity is now minimal.

From May 2007, the delivery of new websites or the re-launches of existing sites across all areas of BBC Worldwide (excluding bbc.com and the commercial media player) has been consolidated into a single web delivery team. The team, which brings expertise from all areas of BBC Worldwide, will have responsibility for developing the potential of all new ideas, including advising on and delivering social networking sites around consumer passions. It will also provide support to improve existing sites.

GLOBAL PARTNERSHIPS

The year's most significant partnership deal was announced in March 2007 when BBC Worldwide entered into a landmark non-exclusive global content agreement with YouTube. BBC Worldwide has a branded channel on YouTube containing hundreds of clips from BBC programmes, giving the business an opportunity to engage with fans of BBC content within the YouTube community and associate its brand with this content. Significant revenues from this deal will be seen in the business' 2007/08 results. The BBC Worldwide channel has proved popular, with over four million videos being viewed in its first month of operation.

Digital Media has worked with the Global TV Sales business to conclude distribution deals with a variety of existing players and new entrants in the video-on-demand market around the world. VOD sales continued to grow throughout 2006/07 especially in Asia, where key deals included the sale of content to M2B World in Singapore and to Hanaro Telecom in South Korea. In the US deals were signed with Netflix, Amazon Unbox and Azureus and in Australia with Telstra Big Pond. In addition, in the UK, BBC Worldwide has done a series of VOD deals with key content aggregators such as BT Vision, Virgin Media and Homechoice.

The business signed a number of deals with international mobile operators including a deal in Asia for mobile phone users to access Top Gear clips through its tie-up with the broadcaster TU Media. Other deals were struck with Telecom NZ, Vodafone's New Zealand network and the 3 network in Ireland, whose customers can now download clips of The Office and Little Britain direct to their mobiles. This market is still in an early stage of development and operators continue to look for the right business model to make this a large scale opportunity.

Its success in concluding distribution deals has made BBC Worldwide an attractive distributor for UK independent production companies. Working closely with Content & Production's Indie Unit, Digital Media helped secure new digital distribution agreements with independent producers Baby Cow and Kudos.