Last week, The Wall Street Journal published an extensive report covering Comcast’s long-term plans for NBCUniversal’s streaming service Peacock that seemingly confirms a lingering question over Universal Pictures’ Pay 1 film output deal.
Per “people familiar with the decision,” Universal won’t renew its current Pay 1 deal with HBO after it expires in 2021, rerouting those films to Peacock. A rep for Universal declined to confirm the report.
The Pay 1 window is a period of time, typically six to nine months after a film’s theatrical run ends, where the film becomes exclusively available to consumers via a pay-TV or OTT entity licensing the entirety or a portion of a distributor’s new release slate.
Historically, such deals were beholden to the likes of cablers, like HBO or Showtime. But streaming services ultimately became just as viable, with Netflix once acting as the home for Disney releases until the studio cut its deal short in order to prep its titles for Disney+.
Universal could have kept its deal with HBO, which may have been a more lucrative route to take, especially given the uncertainty of the film exhibition market emerging from the pandemic. However, that would have meant continuing to help a rival at Peacock’s expense.
With Peacock lagging its streaming rivals in terms of spend on original content, fresher film content would be a significant help.
Corporate-owned film studios are a major streaming asset to utilize (or acquire, as Amazon has done with MGM). Earlier in 2021, Sony closed massive deals with Netflix and Disney for its Pay 1 and subsequent film output deals, respectively, which are expected to generate around $3 billion for Sony over a five-year period.
Universal certainly flexed its muscle this past weekend, when the domestic performance of “F9: The Fast Saga” shattered pandemic box office records following impressive runs overseas. Franchises like the “Fast Saga” are what it will take to get the box office to healthy levels again.
With other hit franchises, like “Jurassic World,” “Despicable Me” and the latter’s “Minions” spinoff, on top of two more “Fast” sequels planned in the coming years, Universal’s IP can still deliver significant theatrical revenue for NBCUniversal.
Plus, Universal can still strike deals for subsequent release windows following Pay 1 on Peacock, as Sony did with Disney.
Peacock’s principal priority remains generating paid subs. While Peacock counts more than 40 million sign-ups, Comcast hasn’t disclosed its number of paid subscribers, which the WSJ report puts at less than 10 million as of May, per an anonymous source.
If Comcast wants to remain open to potential streaming partnerships with other new entrants or even an outright merger for NBCUniversal, as was implied in the report, then it doesn’t make sense to tie up the Universal slate in another years-long Pay 1 deal.
Likewise, HBO Max is on the verge of losing access to content from Warner Bros.’ competing studios, as Lionsgate is pulling Summit titles for cabler Starz and Disney will likely move 20th Century releases to Hulu and Disney+. 20th's current HBO deal comes from the Fox days.
As AT&T merges WarnerMedia with TV giant Discovery, there is still a window of opportunity for other streaming competitors to combine forces and sell their resulting SVOD offering as the best way to see studio content fresh out of theaters — not unlike the original sales pitch for Epix, which was once the Pay 1 home for both Paramount and Lionsgate alongside parent MGM.
Per WSJ, such talks of a streaming partnership between NBCUniversal and ViacomCBS fizzled out ahead of the latter’s rebranded 2021 launch for Paramount+. But ViacomCBS has since made it clear that film will be a major focus for its streamer and expects to average one original film per week in 2022, not unlike Netflix in 2021.
If Comcast sees fit to resurrect such talks, Peacock’s improved film library certainly changes the conversation.