Mark Thompson warned the BBC risks "losing a generation forever" if it does not adapt to the rapidly changing broadcasting world.
Unveiling the findings of a year-long creative review, the director general said the BBC must work harder to appeal to younger audiences by developing new broadband, mobile and interactive services, as well as overhauling its television and radio output
A new multimedia channel for teenagers, an "Electric Proms" festival of contemporary music and a website called Eyewitness , where people can share their memories of any day from the past 100 years, are some of the innovations to emerge from the "Creative Future" project. The review explored what the broadcasting environment will look like in 2012, when digital switchover is complete.
Mr Thompson said: "Audiences have enormous choice and they like exercising it. But many feel the BBC is not tuned in to their lives. We need to understand our audiences far better, to be more responsive, collaborative and to build deeper relationships with them around fantastic quality content."
Ten teams looked at audiences, technology, journalism, music, sport, children and teens, drama, entertainment, comedy and "knowledge building".
Unlike Channel 4, whose popular T4 strand features pop music and shows such as The OC and Hollyoaks, the BBC has long neglected teenagers. But now it is launching a new brand aimed at 12- to 16-year-olds which will be delivered via broadband, television and radio services, as well as mobile phones and other new devices. The service will include a long-running drama as well as comedy, music and factual content.
Mr Thompson said the future of the BBC lay in "Martini Media" - providing programmes where and when people want them, on television, radio, or the internet, 24 hours a day, seven days a week.
News 24 will now become the centrepiece of the BBC's journalism, rather than an add-on, with key talent moving to the round-the-clock digital channel.
The BBC's music policy will be overhauled, with a new joined-up approach across television and radio. This autumn, the BBC will launch an "Electric Proms". Music will also be available from the BBC on broadband, via mobiles and as podcasting, enabling people to create their own virtual radio channels.
Responding to a call by Tessa Jowell, the Culture Secretary, to get "serious about entertainment", Mr Thompson announced the BBC would produce fewer drama titles with longer runs and would invest in the shows with the broadest audiences, including Holby City, Casualty and EastEnders. He promised to make "more brave calls like Bleak House and Doctor Who" and to build on the recent success of Strictly Come Dancing to create a consistently strong Saturday night line-up. In comedy, he pledged to pilot more shows and find new talent.
As the world of broadcasting becomes increasingly complicated to navigate, Mr Thompson said the BBC would make "findability" a priority, launching a powerful new search tool on its website.
Mr Thompson said the changes would require increased investment. "That's why the BBC's bid for more resources to make quality content is the most important line in the whole licence-fee submission," he said. Extra funding for the changes will also come from the £350m a year saved by the current "value for money" programme of cost cutting and redundancies.