Updated costs: Project Canvas 

 

In November 2008 the BBC Executive submitted details of proposals to form a joint venture 
partnership to deliver internet protocol television (IPTV), which included information on costs. 
This note provides revised estimates of the cost of BBC participation based on revised 
assumptions as following: 

 

1. Planned launch delayed to late 2010 (from 2009) – this means Canvas does not benefit 
from marketing synergies with the launch of Freeview HD in 2009. 


2. More detailed costs information being available - drawing on additional data made 
available by new partners; information gathered through industry benchmarking exercises 
and the benefits of greater planning certainty. 


3. The likely increase in the number of partners – this would enable the BBC to seek to 
maintain the previously committed level of costs, despite an increase in total costs. 




 

In the original application, the BBC also modelled the potential further efficiency of including 
Freesat within the Canvas JV, subject to further regulatory approval. For clarity, this 
efficiency is not reflected within these revised numbers. 

 

Revised estimates for the total costs of Canvas are set out below for the period to launch and 
for four years after. With the anticipated number of partners likely to increase from four to at 
least six, the total cost to the BBC over this period is projected at £16.4m, compared with 
£16.6m in the previous model1. 

 

These figures remain subject to further review in light of the approval timetable, any changes 
arising from conditions attached to the approval and ongoing modelling work by all parties, 
including any new venture participants. 

 

£m 

Period to 
launch 

Year 1 

Year 2 

Year 3 

Year 4 

Total 

Overheads 

2.1 

2.6 

2.4 

2.4 

2.5 

11.9 

Marketing 

3.2 

15.5 

11.2 

9.4 

9.2 

48.4 

Technology 

12.6 

6.1 

3.4 

4.0 

4.2 

30.3 

Operations 

1.9 

3.9 

4.3 

4.0 

3.6 

17.6 

Product Management 

1.0 

0.5 

0.5 

0.5 

0.5 

3.1 

UX Design 

1.3 

0.8 

0.7 

0.7 

0.7 

4.2 

Total Cost 

22.0 

29.4 

22.5 

21.0 

20.7 

115.6 

Cost recovery 

0 

-2.8 

-4.0 

-4.9 

-5.3 

-17.0 

Balance 

22.0 

26.6 

18.5 

16.1 

15.5 

98.6 

BBC cost with 6 
partners 

3.7 

4.4 

3.1 

2.7 

2.6 

16.4 

BBC cost with 4 
partners 

5.5 

6.7 

4.6 

4.0 

3.9 

24.7 



1 At the point of the application, the BBC was one of three publically committed partners (BBC, BT, ITV) and 
modelled costs in the expectations of four partners at launch. The BBC is now one of four publically committed 
partners (adding commercial PSB Five) and anticipates that it will be one of at least six by launch, subject to 
approval. See also revised governance proposals published by the BBC Trust. 


A note on cost categories: 

• Overheads include accommodation and staff costs. 


• Marketing includes brand development, production of advertising and marketing materials 
and media spend. 


• Technology costs include specification development, any licensing costs and back-end 
(platform) build. 


• Operation costs include customer support and platform operation costs. 


• Product management includes cost of product definition and commercial requirements. 


• UX design includes up front user interface design. 

 




The table also includes a modest cost recovery line which comprises anticipated income 
from listings and or the integration of services (following the model for linear channels for 
Freesat) and licensing of the Canvas brand, for example to ISPs that wish to publicise the 
tariffs that meet the Canvas minimum quality standard. 

 

In addition to these costs the BBC has already invested £715,140 in work to develop the 
application in the period July 2008 to August 2009. This is in addition to investment as part of 
the BBC’s ongoing research and development work to inform specification development, 
which is now being shared with the industry as part of the Digital TV Group’s work on 
‘Connected TV.’