There are a few ways you can look at NBCUniversal’s decision to shut down its NBCSN (NBC Sports Network) channel and distribute NBCSN’s programming to the USA network and Peacock.
On one level, it’s a cost-saving measure and a way to boost USA and Peacock at a time when both could use a little love.
On another, it’s the first of many similar decisions NBCU and other big networks are going to be making as they consolidate their offerings on linear and prepare to migrate the bulk of their business to streaming.
The powers that be at all of the major networks seem to understand that the future belongs to streaming. Their goal is to make the switchover as painless as possible by gradually reducing their footprint on linear TV while increasing it on streaming. The process of reducing their linear footprint is a lot like one of those peg board games, the ones you find at Cracker Barrel, where the goal is to jump one piece over another and remove the piece you’ve jumped, till you’re left with just a single piece.
So NBCU just picked up USA and jumped it over NBCSN, which was then removed from the board. That’s a move NBCU and all the other networks are going to be making often as they try to figure out how to shrink their linear portfolio and grow their streaming offering without turning off both viewers and advertisers.
It’s a tricky balancing act, as we’re at a point where there are still far more viewers watching traditional pay TV than streaming. But that number is changing far more rapidly than it has been, and the networks don’t want to get caught in a situation where they are losing out streaming because their competitors have more desirable programming.
At the same time, they’ve got to keep their traditional linear businesses in shape, as that is still (for now) their major source of revenue.
So moving those NBCSN viewers to USA and to Peacock makes a whole lot of sense.
The game is going to get a lot more complicated as many viewers are likely to make the trip to streaming slowly--moving to vMVPDs and smaller cable packages before making the big jump to streaming only.
And there’s a goodly number who won’t ever make that jump, which is why the networks will need to keep their linear offerings alive, even after the majority of viewers have made the switch to streaming.
In addition to viewers, networks are going to have to manage advertiser expectations during the switchover, as well. Today’s conventional wisdom is that younger, more affluent audiences are on streaming, while older and less affluent audiences are still on linear.
While that means that certain brands will definitely be all about streaming, many of the big national advertisers, the kind networks rely on, are going to want to reach a wide range of audiences, so the networks are going to need to present them with strong offerings on both linear and streaming.
And if all that wasn’t stressful enough, you can rest assured that the mainstream media will be beating the drum about the “death of pay TV” with all sorts of gory stats about how many viewers the various pay TV services are losing and how happy viewers are once they make the switch to streaming.
All of which is going to make advertisers leery of committing their money to television.
Fortunately, there are plenty of silver linings in all these clouds.
First and foremost, this is all temporary. The next three to five years will be tumultuous, but after that things will settle down and streaming will become the dominant ecosystem for TV with all that implies and linear will be in a prolonged sunsetting stage.
There’s also much better measurement available to handle the period where neither ecosystem is dominant. iSpot already had a system in place to provide apple-to-apples viewership stats across streaming and linear platforms so that advertisers can make sure their media buys are reaching the right audiences while avoiding massive overlap.
Addressable advertising is becoming mainstream, too, both on streaming (where everything has always been addressable) and on linear (where Nielsen recently rolled out a way to measure ad slots that are split between several advertisers.)
That’s on the advertising end.
On the programming end, we’re already seeing how traditional networks are making excellent use of their streaming networks to promote their linear properties, giving them a strategic advantage over tech-only players like Amazon and Apple, especially when it comes to those viewers who are still primarily on linear but thinking of making the switch.
Sports still needs to be figured out, but NBCU’s decision to move some of their sports content from NBCSN to Peacock is a sign that the networks are aware of the fact that sports will eventually need to migrate to streaming, a move that is no doubt tied up in myriad rights issues.
I suspect that NBCU’s move will be the first of many similar moves made by the big network groups as they consolidate their linear offerings and gently nudge their audiences towards their streaming properties. It will be a gradual process--nothing in TV ever happens quickly--but it will happen and successfully managing that migration will be the line between success and failure in the years ahead.
Alan Wolk is the co-founder and lead analyst for media consultancy TV[R]EV
The smarter way to stay on top of the streaming and OTT industry. Sign up below.
Thank you for signing up to Next TV. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.