The decline in cable viewing is “not because people don’t like it, but they are being priced out,” Matt Strauss, chairman of direct-to-consumer and international at Comcast-owned NBCUniversal, told a Digital Entertainment Group virtual meeting just before Christmas.
“There’s a lot of competition in the streaming space… a lot of it going after Netflix,” said the executive who oversees NBCU’s new Peacock streaming operation, which debuted in July. Strauss stressed that NBC (and parent Comcast) have a long-term strategy for operating in this competitive sector – although he did not disclose many specifics.
In his brief but wide-ranging remarks, Strauss pumped advertisers’ “pent-up demand” for ways “to participate in premium content” and he also waxed nostalgically for the nearly 20-year-old MagRack video-on-demand project that he ran at Cablevision Systems’ Rainbow Media Group.
Strauss reviewed the challenges of launching Peacock during the pandemic, especially without being able to piggyback the streamer’s debut onto NBC’s waylaid Summer Olympics juggernaut. Glowing with upbeat optimism, he explained that by spreading out the launch over “the back half of the year … [generated] an ongoing cadence and drumbeat that … was actually better than what we had initially planned.”
Strauss concentrated on what advertisers want, saying that they are looking for a way to participate in streaming content, which poses special opportunities and challenges for NBC.
“We saw that as a sweet spot for us,” he said, but the Peacock team was concerned about how to “shape a user-friendly ad load.” He emphasized that NBC wanted to avoid the constant repetition of the same ads in order to fulfill impression commitments to advertisers, an annoying factor on many other streaming channels. He said NBC was “really fortunate” to nail down 10 premium launch sponsors for Peacock.”
“They get an uncluttered environment,” he said. The initial advertisers also “have a seat at the table as we’re developing the product.”
“Our ambition is really not just to look at this as a 15-second or a 30-second spot” but to find other creative ways through ad innovation that we can bring to advertisers, he explained.
Strauss, a former DEG chairman, characterized the challenge as finding “creative ways that brings advertisers to light but maintains a premium environment.” Without disclosing details of Peacock’s plan, Strauss said, “We feel we’ve [found] other ways to bring advertisers into a premium user experience.”
Not NBC Plus
Strauss insisted that NBC deliberately avoided adding a “Plus” to its brand name, as Apple Plus, Disney Plus and other streaming providers have done. After evaluating the Netflix position, which he acknowledged was a “good price-value equation” NBC realized it didn’t want to be a “me-too” service.
“We want to position ourselves as an aggregator that goes beyond” traditional programming, he said, as part of a plan to “migrate customers to subscriptions.”
“We see it as an opportunity over time,” Strauss added, indicating that “early data [show] our strategy is resonating” because viewers are “looking for lower-cost alternatives” to cable. He said the company wants to position Peacock as an aggregator that can go beyond the boundaries of our catalog and our content, citing the “user friendly ad load” of no more than five minutes of ads per hour. But he stopped short of making a permanent commitment to such limited advertising.
“We all know the power of on-demand,” he said, noting that “the way people watch TV is broader,” across “a lot of different modes.” Strauss called the three-month Peacock trial runs with Comcast’s X1 and Flex (internet-only) customers a valuable process in refining the user interface.
“It was a really interesting sandbox,” he said.
He expects a bonanza of new programming in 2021, as Hollywood’s COVID-induced production slowdowns end and the Olympics momentum revives. In addition, Peacock will experiment with new pricing scenarios, such as its keystone series The Office, which will be offered “in a way that’s maybe a little bit more unique than what people have seen in the past,” he said.
The first two seasons (2005-2006) will be available for free with ads; there will also be “Superfan Episodes” on Peacock Premium for $4.99 monthly with ads or $9.99 without ads; the “Superfan” package also includes unseen footage, extended cuts and deleted scenes.
Strauss, a 16-year Comcast veteran, reflected that he has had “a front row seat in the evolution that we’ve gone through as a company.” He shared his enthusiasm that Peacock is fulfilling his video-on-demand dream dating back to the early 2000s when he was executive VP and general manager of Rainbow Media Holdings LLC's Mag Rack.
Strauss’ presentation was the centerpiece of a virtual DEG event that replaced the group’s annual social/business gathering, usually held on the first night of CES. Amy Jo Smith, DEG’s president/CEO, characterized the online evening as offering insight into, “the ways consumers are enjoying entertainment by transactional models or subscriptions.” That alone marked a diversion for an organization that was founded for – and still substantially focuses on - the shrink-wrapped world of DVDs and BluRay discs, an evolution from its original videocassette roots. Smith declared the holiday-themed online event (complete with beverage kits shipped in advance to participants) as a digital version of what “we would have done in Vegas.”
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