Here are some of the key quotes from BBC director general Mark Thompson's speech to staff on his plans for the future of the corporation.
It's a story which includes some painful news and some difficult choices. I believe we will look back at today in a few years time as the moment when the BBC did make some difficult choices.
I don't want to minimise the human consequences of some of the decisions we have reached. But this is not just a story about cuts. It's about building our future and grasping some amazing opportunities.
QUALITY AND INNOVATION
Across TV as a whole we plan to commission 10% fewer hours than we do today by 2012. That's the equivalent of around £100 million of commissions every year - it will have a much bigger impact than shutting a digital network like BBC Three would have had. We'll keep repeats on BBC One peak time at their current low level.
On the web, we will again commission fewer pages but concentrate our investment to make sure that they're of higher quality.
Above all, we're going to make sure that what we do is really distinctive - different from what commercial broadcasters can provide - and really original.
VALUE TO AUDIENCES
We should also reach out with quality content to those who currently use the BBC less - particularly children and other younger audiences. We should boost the value and relevance of what we offer to the UK'S nations and localities.
It offers us the chance to redefine broadcasting - no longer transmit once and then throw away, instead the idea of content that grows in value and usage over time.
So we want to develop the web and other digital platforms so that audiences can find, play and share our content.
BUILD DIGITAL BRITAIN
Over the next few years, we've got a central role in digital TV switchover - the process began in the early hours of yesterday morning when we switched off the BBC Two analogue signal at Whitehaven.
We're going to launch Freesat and build on the strong position of Freeview, we're going to deliver the targeted help scheme to enable disadvantaged groups to make the change to digital.
What this adds up to is a BBC which is smaller than it is today but which can still deliver a bigger impact.
It's a BBC which won't try to do everything. No new channels or networks. No new local radio stations or regional centres.
The BBC will be physically smaller. We're building some of the most advanced broadcast centres in the world. But we're also reducing our property footprint by consolidating on fewer sites. Part of that plan - though it will be an emotional wrench for many of us who have worked here over the years - is the eventual sale of Television Centre.
IMPACT ON JOBS
Across the BBC, the numbers will be significantly lower than the figures you've read about in the press, but I don't want to minimize them: even one redundancy can be a big blow to the person involved.
The headline number of post closures we estimate over the five year period is 2500.
But that's not the end of the story. The money we save through efficiencies and the switching of resources is going to go back into the BBC in the form of fresh investment and that will create new jobs.
FACTUAL TV PROGRAMMES
To be strong, it needs to be the right size - and that means a substantial reduction from its current scale.
I know that this is a tough message especially after the previous upheavals which Factual has gone through. It's painful for everyone involved. I've worked in and led this part of the BBC myself. I believe passionately in in-house factual production and I believe the BBC will need a really strong factual division 10, 20 years from now.
In those areas where there are significant post reductions, we intend to appeal for volunteers and begin the process of selecting for retention, retraining, redeployment or redundancy simultaneously.
So what would success look like in 2012, the year of the completion of switchover, the year of the London Olympics, one of the biggest broadcasting events in the BBC's history?
It will be a smaller BBC, but one which packs a bigger punch because it is more focused on quality and the content that really makes a difference to audiences.