The director-general of the BBC made the remarks when unveiling a report called the Value for Audiences. It found the BBC costs households just 9p per hour, whereas other streaming services cost 15p per hour.
Comparing the BBC to other streaming services, the report insisted the corporation “continues to be very good value for money”.
It added: “Taken together, a bundle of subscriptions providing advertising-free, high-quality services comparable with those offered by the BBC across video, audio and news would cost over £400 per year in comparison to a current licence fee of £157.50.”
The BBC arrived at the figure by adding the average cost of streaming services for TV and film, along with streaming services for music and premium online news sites.
Twitter users mocked the idea that the BBC is worth more than its streaming competitors.
One said: “Tim Davie must be living on another planet — reckons the BBC would cost £400 per year if it’s turned into a subscription service.”
Another questioned: “But would it be worth £400 per year and who would pay it? Not me.”
One more user said to “close the BBC” outright as “it has run its course”.
Tory MPs also criticised the suggestion the BBC offers greater value for money.
Philip Davies, a former member of the Digital, Culture, Media and Sport select committee, said to the Telegraph: “If the BBC is such wonderful value for money, why does it continue to insist on the criminal law being in place to force people to pay for it? If they really believed that, the BBC would be happy to join Netflix and move to a voluntary subscription.
“Their desperation to avoid a voluntary subscription is the only proof we need that the BBC don’t really think they represent such wonderful value for money.”
Andrew Bridgen, MP for North West Leicestershire, added: “The fact that if you want to watch live TV you have to buy a TV licence even if you don’t wish to watch the BBC’s output is like going to the newsagent to buy a copy of The Telegraph and being forced to pay for a copy of The Guardian.
“The BBC is out of fashion, out of date and out of touch – and being out-competed by its competitors as the viewing figures show.”
Mr Davie also said fewer BBC shows will appear on streaming services after research found people mistakenly believe shows such as Peaky Blinders were created by Netflix.
He said: “The person who is waiting for that show to come to Netflix will be increasingly disappointed.”
Shows currently on Netflix and Amazon will be moved to the BBC’s iPlayer and BritBox once their current contracts have expired.
The director-General also suggested later on to the Reform think tank the broadcaster may make “difficult choices” about its programming, like cutting documentaries.
It comes after Richard Sharp, incoming BBC Chairman, insisted last month that the licence fee was the “least worst” way of funding the corporation.
However, he told MPs at the House of Commons digital, culture, media and sport select committee he keeps an “open mind” about how the BBC could be funded differently.
Mr Sharp suggested other possible options for funding the BBC in the future could include a household tax like the one used in Germany, “which amounts to the same amount of money”.
He added: “So when we next get the chance to review the structure of this then it may be worth reassessing.”