Joining the growing stampede into the streaming world, NBCUniversal on Monday said it would launch a streaming service next year — but one that will differ from rival services.
NBCUniversal is following Sony Corp., CBS Corp., Walt Disney Co. and AT&T’s WarnerMedia into streaming. Those companies have all offered or plan to offer services directly to consumers for a monthly fee. By contrast, NBCUniversal said its service will be offered free to pay-TV customers of its parent company, Comcast Corp.
The company plans to roll out the new advertising-supported streaming service in early 2020 — before NBC’s broadcast of the Tokyo Summer Olympics. The service initially will target Comcast’s more than 50 million subscribers worldwide. The Philadelphia-based cable giant has been expanding, and last fall acquired European satellite TV service Sky. The $40-billion purchase gave Comcast a global presence — and a pressing need to find ways to keep its pay-TV customers paying monthly subscriptions.
“NBC needs to get into streaming because everyone else is doing it,” said Jeff Greenfield, co-founder of C3 Metrics, a New Hampshire firm that analyzes advertising effectiveness. “They need to be there.”
NBCUniversal’s move into streaming underscores dramatic shifts in entertainment led by Netflix, which now boasts more than 130 million customers worldwide.
Netflix, Amazon.com and other streaming services offer their content without commercials. NBCUniversal’s product will be designed to include advertisers, who are desperate to reach viewers who watch television online. The service also could offer shows from smaller programming companies, such as Nickelodeon owner Viacom Inc., Sony Pictures Television or Discovery.
“We’ve spent a lot of time trying to figure out a unique way to come into the market with a direct-to-consumer product,” NBCUniversal Chief Executive Steve Burke said in an interview. “And we believe there is a big demand by advertisers who want to get their messages in professionally produced content. ...We are trying re-create what a broadcast network has historically been.”
Consumers who sign up for NBCUniversal’s proposed streaming service won’t see 15 minutes of ads an hour like they do on the broadcast network, Burke said. Instead, he said, “you might have three to five minutes of advertising an hour.”
There will also be a commercial-free version of NBCUniversal’s streaming service for a fee. Viewers in regions not served by Comcast, including much of Southern California, also will be able to subscribe to the service.
Until now, NBCUniversal has been reluctant to disrupt a major revenue source for Comcast — the cable TV fees.
Like other distributors, Comcast has been grappling with cord cutters who drop their pay-TV service for lower-cost streaming services.
More than a decade ago, New York-based NBCUniversal co-founded streaming service Hulu, which now boasts 25 million customers. But since Comcast acquired NBCUniversal in 2011, the broadcaster has tiptoed into streaming.
Soon, Disney will assume control of Hulu when the Burbank entertainment giant completes its purchase of much of Rupert Murdoch’s 21st Century Fox. After that transaction is completed, NBCUniversal’s stake in Hulu will remain at 30% while Disney’s ownership will grow to 60%.
Instead of spending millions of dollars helping Disney upgrade Hulu’s technology and develop more original content, NBCUniversal has an incentive to strike out on its own.
Burke declined to say whether NBCUniversal would eventually sell its stake in Hulu.
Streaming has become all the rage in the entertainment industry, and legacy providers are scrambling to compete with Netflix, which has upset the economics of traditional television.
“With so many streaming services out there, everyday consumers are getting confused,” Greenfield said. “If they subscribe to a number of these new services, they’ll soon find that it gets to be very expensive…. Consumers are finding out that they need someone who can organize all of this content.”
Comcast wants to control “the box” in consumers’ homes, Greenfield said, because that provides a treasure trove of viewership data that can be used by the company and advertisers to send commercials to viewers who might be more inclined to view their products.
“The companies that have the boxes in the home will be the ones who will ultimately win,” Greenfield said.
Burke said that to prepare for the new service, he was streamlining his management team.
Longtime cable television programmer Bonnie Hammer, who is known for her keen eye for marketing, will oversee the streaming service. She was promoted to a newly created role chairing direct-to-consumer and digital enterprises.
Los Angeles-based studio head Jeff Shell was named chairman of NBCUniversal Film and Entertainment. He will be in charge of the company’s West Coast businesses, including NBC Entertainment as well as NBCUniversal’s international division and Spanish-language Telemundo, which is based in South Florida.
Donna Langley was promoted to chair of the Universal Filmed Entertainment Group. Global theatrical distribution and home entertainment now is part of her purview.
NBC Sports chief Mark Lazarus also saw his duties increase as he takes over most of NBCUniversal’s East Coast-based content businesses, including NBC News, MSNBC and CNBC and cable channels, including USA Network, Syfy, Bravo and E! that previously reported to Hammer. Lazarus becomes chairman of NBCUniversal Broadcast, Cable, Sports and News.