NBCUniversal’s announcement this week that it intends to launch a streaming service in 2020 presents a new challenge to the media industry: The digital pool is about to get very crowded with fierce rivals and competing consumer options.
The Comcast-owned media conglomerate’s yet-to-be-named broadband entity, which will be overseen by veteran programming chief Bonnie Hammer, will join rival streaming outlets from Walt Disney Co. and AT&T’s WarnerMedia that are set to debut this year. Of course, these streamers will vie with already established ones: Netflix, Amazon and Hulu, CBS All Access, ESPN+ and Fox Nation. Also joining the mix: Apple in January struck a deal with Samsung to make its iTunes streaming-video app available on Samsung smart-TV sets.
“All the kids are doing it,” says Tim Hanlon, CEO of Vertere Group, a media and advertising consultancy firm. “The days of a major network group not having a stated goal to have at least one major OTT service out in the market — and soon — are over.”
NBCU’s streaming plans will be somewhat different from those brandished by many of its competitors. The offering will be free to NBCU pay-cable subscribers in the U.S. and will be supported by advertising. Plans call for the streaming service to be made available to subscribers of both Comcast, NBCU’s parent company, and Sky, the European satellite broadcaster that Comcast acquired control of last year. In all, NBCU will make the service available to 52 million subscribers. The streaming offering is expected to feature original content and programming from outside partners as well as material from the company’s archives. An ad-free version will also be available for a fee, and non-pay-TV customers can purchase a subscription separately.
“We’re going to unite the whole company behind it,” NBCU CEO Steve Burke tells Variety. “We took the person who is behind the [division with the] most operating cash flow in the company and gave her this job. This is a sign internally and externally that we’re serious. Deadly serious.”
NBCU intends to use its coming broadcast of the 2020 Olympic Games in Tokyo “to put a lot of afterburners on this service,” says Burke, who believes “consumers are going to get used to having multiple services, and they’ll pick three or four services and bundle themselves.” NBCU wants to achieve scale quickly, he adds: “We want to build a platform that has lots and lots of people using it, so we can start to make money with advertising.”
NBCU has tested subscription video on demand in the recent past. The comedy-focused service Seeso offered access to episodes of “Saturday Night Live” and “The Tonight Show Starring Jimmy Fallon” but was shuttered after failing to generate a substantial customer base over nearly two years. The new offering is significantly larger and more ambitious — and at first eschews the subscription model.
Much could change before 2020, notes Hanlon. “A lot will happen between now and the beginning of next year, and not all of it will be controlled or controllable by the major programmers,” he explains.
|“We want to build a platform that has lots and lots of people using it, so we can start to make money with advertising,” says NBCU CEO Steve Burke.
Disney’s jump into broadband with ESPN+ and, soon, Disney Plus appears to have sparked a rush to the new platform — and with good reason. Where traditional media companies were once content to let new players like Netflix have their programs in exchange for a mountain of revenue, executives have begun to realize letting others have some of their most popular programming is luring viewers away from their electronic clutches.
The choice of where to place programming can be agonizing — witness AT&T’s recent decision to let Netflix enjoy continued access to “Friends” even as the telecom giant launches its own streaming competitor. Such dilemmas aside, NBCU knows full well that putting its program franchises under its own umbrella might give the Comcast-owned conglomerate more control over the viewing habits of millions of consumers.
Burke thinks the ad-supported model, rather than one that’s subscription based, will make the streaming outlet more accessible and give the company a fighting chance against established players. “When we analyzed it, Netflix has so much product and so much of a head start that to come out with an SVOD product, it’s tough to imagine getting to success quickly. It’s much more likely that we’d have years and years of banging our heads against the wall,” says the NBCU chief. “We kept looking at how do you do this without losing billions and billions of dollars.”