Dive Brief:
- Comcast's NBCUniversal plans to launch a free, ad-supported streaming service for pay-TV subscribers in 2020, according to a press release. For those who don't subscribe to pay TV, the streaming product will cost about $12 a month. The timing launch means that it will likely include content around the 2020 Summer Olympics to attract users. An ad-free version will also be available for a fee.
- The streaming service will include 1,500 hours of NBC TV shows, including "Saturday Night Live" and "Parks and Recreation," and hundreds of hours of Universal movies. It will include live TV, like news and sports, as well as on-demand programming. The service could also bring in content from other companies, like Sony, Discovery and Warner Bros.
- NBC plans to air between three and five minutes of ads for each hour of programming. The network expects to make $5 a month per user on the service from ads. The new service will be led by Bonnie Hammers, who has been promoted to chairman, direct-to-consumer and digital enterprises.
Dive Insight:
NBC's entry into the increasingly competitive video streaming market is dependent on NBC making deals with the biggest pay-TV providers, but the network doesn't expect any issues since the service would be free to the providers' customers. NBC sees an opening as a long-form, ad-supported service, according to sources cited by CNBC. NBC conducted research showing that subscribers prefer free services with a low ad load, and its plan would be cheaper for pay-TV subscribers than Hulu's $7.99 per month ad-supported service and comparable to Hulu's $11.99 ad-free service for non-pay-TV subscribers. While a paid ad-free version will be available, NBC plans to focus on growing it as an ad-supported free service, counting on its pay-TV subscriber base will give it a head start, per CNBC.
The audience for video streaming continues to grow, as more consumers cut the cord. The number of U.S. cord-cutters was expected to jump 32.8% to 33 million, according to eMarketer. However, the number of streaming options is also growing rapidly, which can be overwhelming to consumers. Respondents in a PwC's Consumer Intelligence survey subscribed to an average of 3.8 pay-TV or streaming services, but only watched two. Cord-trimmers subscribed to 5.3, but watched 2.8. NBCUniversal, because of its brand recognition, could have a leg up on some of the competition as cord-cutting continues to expand. Still, it will be going up against the likes of Netflix, Hulu and Amazon Prime, which helped establish the market, as well as planned services from a number of other big players.
As competition heats up, established streaming services have been rolling out original programming and new ad products to attract viewers and advertisers. Netflix announced last year that it would increase its marketing spend by 54% to $2 billion and invest between $7.5 billion and $8 billion on original content in 2018 and continue to invest in programming over the next few years. Hulu has announced new ad offerings, including a "pause ads" feature, and expects more than half of its ad revenue to come from "non-disruptive experiences" over the next three years.
