The BBC is making big changes to its structure, cutting more than 1,000 jobs, and stripping out layers of management because of a £150 million shortfall in its licence fee income as more people watch programmes online.
Director general Tony Hall told staff that increasing numbers of viewers were not watching live television, so did not need to pay the licence fee.
The cuts were announced as industry regulator Ofcom revealed that half of young people's viewing time was watching live TV, with many preferring online services despite the value placed on public service broadcasters (PSB) by the public.
Ofcom's third review examining how the BBC, ITV, STV, UTV, Channel 4, Channel 5 and S4C had fulfilled the purposes of public service broadcasting found they continued to make a "significant contribution" to UK broadcasting.
Over half of TV viewing was to the main PSB channels, rising to 70% when extra channels such as Plus One were included.
But only half of 16 to 24-year-old's time was spent watching live TV amid the increasing popularity of services such as Netflix, Amazon Instant Video and BBC iPlayer, the report said.
Ofcom said the PSB system needed to "evolve" as the trend towards online viewing grwe, otherwise public service broadcasters faced "difficult choices" about which services they could fund.
Sharon White, Ofcom's chief executive, said: "Public service broadcasting continues to deliver TV that is enjoyed and valued by millions of viewers across the UK.
"More people are watching online or on demand, and this presents challenges as well as opportunities for public service broadcasters.
"They must continue to find new ways of connecting with audiences, and the PSB system needs to evolve to ensure it remains effective in the digital age."
The BBC is planning to cut three layers of management, while some of its divisions will be reduced.
The jobs are mainly going in professional and support services amid moves to cut back on duplication of roles.
Tony Hall said: "A simpler, leaner BBC is the right thing to do and it can also help us meet the financial challenges we face.
"We've already significantly cut the costs of running the BBC, but in times of very tough choices we need to focus on what really matters - delivering outstanding programmes and content for all our audiences."
The BBC said the changes to the structure and organisation would make it "simpler, leaner and more effective".
The corporation has already taken measures to make £1.5 billion of savings a year by 2017, mainly through cutting administration and property costs, pay and jobs as well as shared sports rights.
"Despite the progress already made, and the realities of the licence fee being frozen for seven years, a new financial challenge means additional savings must now be found," a BBC statement said.
"The licence fee income in 2016/17 is now forecast to be £150 million less than it was expected to be in 2011.
"This is because as more people use iPlayer, mobiles and online catch-up, the number of households owning televisions is falling.
"It also provides further evidence of the need for the licence fee to be modernised to cover digital services."
The new cuts will deliver savings of £50 million through merging divisions, cutting down management layers and improving processes, the corporation revealed.
The BBC said the proposed steps would be:
:: To reduce the number of divisions. First by joining up technology teams across digital, engineering and worldwide. Further changes were also possible.
:: To reduce the number of layers from the top to the bottom of the organisation. In some places there were 10 layers of people and management and this would be cut to a maximum of seven in the future.
:: To reduce management roles in all areas of the BBC. A simpler organisation would "inevitably" require fewer managers, especially at senior levels.
:: To simplify and standardise procedures across the BBC, particularly looking at how professional and support areas such as marketing and communication, finance, HR, IT support and legal were structured and could be simplified.
Gerry Morrissey, general secretary of the broadcasting workers' union Bectu noted that the cuts would only achieve a third of the savings the BBC wanted to achieve.
"We support the idea of standardisation and simplification, but we will have to study the details of the announcement," he told the Press Association.
"We want to make sure that anyone affected by this is genuinely redeployed."
Michelle Stanistreet, general secretary of the National Union of Journalists, said: "The NUJ has been pressing for a restructuring of the BBC that prioritises journalism and programming for some time, one that tackles the fleshy layers of management that have been preserved in the face of waves of cuts that have badly hit grassroots content.
"So a hard look at how to best deploy resources on the services that really matter and make sure the BBC's structures are efficient and fit for purpose is overdue.
"News of the significant budget deficit should be a wake-up call for all those who care about public service broadcasting in the UK.
"The looming negotiations on charter renewal will be a critical juncture for the BBC."