Chris Khouri, media and broadcasting associate analyst with Europe's leading market analyst, Datamonitor, in this exclusive analysis for domain-b, explains why the BBC is moving away from its position as a publicly funded broadcaster and becoming a more commercially focused organisation.

The British Broadcasting Corporation (BBC) recently announced the launch of a deal to provide content through three channels on the web's most popular video aggregator - Google Inc's YouTube. (See: BBC ties up with Google's YouTube for internet broadcast)

As a result of this deal, two branded entertainment channels will now provide short clips of the UK public service broadcaster's content on the internet. BBC has also announced its intention to launch a news-oriented channel later in 2007.

The move will be mutually beneficial to both BBC and Google. The BBC will gain advantage from utilising alternative distribution points to promote content, derive revenue from advertisements on two of its channels and with the partnership drive online traffic back to BBC website.

The move will ultimately benefit Google through the expansion of its high-end content portfolio. This will add value to its service as the competitive environment for the online video sharing market intensifies.

Despite this, the move adds to the argument that the BBC is moving away from its position as a publicly funded broadcaster and becoming a more commercially focused organisation.

Considering that premium content is not available at launch, the primary motives for the partnership for the BBC at present are to use the platform as a promotions vehicle rather than as a platform to generate substantial revenue.

The deal, which is non-exclusive and set to run for several years, will aim to expand the BBC's audience reach through YouTube's monthly audience of around 70 million as well as generate profits from a revenue share scheme. Two of the channels - BBC Worldwide and BBC News - will carry ads with the remaining channel remaining void of any advertisements to remain in line with the BBC's public service remit.

The move might also help push the BBC brand into markets where it has not had a large foothold - such as in North America - where YouTube's presence online is considerably strong. Datamonitor considers this partnership to be of considerable interest and is a play that should evolve as time goes on.