Peacock: Spreading Its Wings to Claim The Premium AVOD Terrority
Peacock, paired with other NBC Universal content assets, will create a platform to meet all of consumers (and advertisers) premium content needs: live sports & news, local, TV shows and movies
Twitter: @arthurtyson3
After a three month trial, Peacock, NBC Universal’s video on-demand service, will fully leave its perch on July 15th to fly on to the video landscape. While hovering over the video on-demand landscape, Peacock observed that the premium subscription territory was dominated by: Netflix, Amazon Prime Video and Disney, and the non-premium advertising terrain was commanded by YouTube and Facebook. But Peacock identified a subset of video viewers, who have reached their limits on subscription spend, but do not want to sacrifice high quality content and product performance – while also avoiding salacious and propaganda content. Per my previous article, The Peacock Flies on Content, Data & Ads, Peacock decided to appeal to subscription adverse users and positioned itself in the premium advertising video on-demand (AVOD) region.
Peacock was not alone in its observation of the available AVOD real estate. New upstart players, such as IMDBtv, Tubi, Vudu, Pluto TV, and Roku have moved into the space first, but each of these services lacked the depth of premium content. To get into this space, traditional broadcast players with premium content and seasoned advertising capabilities have moved to purchase young digital services: Viacom (Pluto TV), FOX (Tubi) or created their own offering i.e., HBO MAX free. Peacock desires to stand out from the crowd, by attracting viewers with its premier live content catalog: SNL, NBC Sunday Night Football, Premier Soccer League and The Today Show, paired with 15,000 hours of broadcast entertainment content that captures the universal taste of consumers general entertainment needs.
It not only aspires to beat out other premium AVOD services, but also to steal viewers from YouTube, Facebook, Netflix and Amazon Prime. But Peacock’s current structure, and by itself, doesn’t provide enough depth of content, appeal to all users, access across platform and variety of content types to win over viewers from the dominant video on-demand players. Over the past few months, NBC Universal has been making investments to strengthen the Peacock and pair it with other video on demand services to increase:
Depth of Content Categories (Crime, Documentaries, Sci Fi, etc.)
Appeal to All Users (Millennials and Personalization)
Access and Reach Across Platforms (Smart TVs)
Variety of Content Types (Regional and Local Content & Movies)
Depth of Content Categories to Explore Unique Tastes
Peacock’s 15,000 hours of content covers almost 85% of most US consumers' popular content categories — drama, comedy and action — to immediately attract millions of users, especially with shows such as Community, Parks & Recreation and This Is Us. Consumers can find joy in connecting and communicating about TV shows that move into pop culture conversations. However, viewers must also be able to satisfy their individual needs to explore their own unique tastes. The other 15% of “long tail” content categories, such as documentaries, science, investigation and technology, allow users to deepen their own esteem by exploring the full of body their content preferences.
Realizing Peacock needs to further spread its wings into adjacent content categories, NBC Universal signed a licensing a deal with A&E Networks to acquire hundreds of hours of TV shows, such as First 48, Storage Wars, Cold Case Files, Pawn Stars, American Pickers, and Project Blue Book. These shows and others will provide Peacock with the necessary depth of unique content categories—documentaries, crime, history and investigation — to drive engagement, and also to gather rich insights into user’s taste to effectively target ads. Although Peacock is now armed with depth of content across broadcast and cable networks, it still lacks the appeal to all users, as most Millennials and Gen Z users are cable and broadcast TV adverse.
Appeal to All Users
Millennials and Gen Z are also synonymous with titles such as, “cord cutters,” or “cord-nevers.” Many of them, having never oriented themselves to cable and broadcast channels, opt for more cost-effective solutions: Netflix, which costs $12 per month, and/ or free solutions from Facebook and YouTube. But these users still demand high quality content, for free. As pointed out above, this white space opportunity caused a “gold rush” to the premium AVOD territory. Upstart AVOD services created Millennial and Gen Z oriented network channels that appeal to their lifestyles.
With Peacock skewing older, the average broadcast viewer is 44, NBC Universal/Comcast wanted to also deliver a solution for non-cable subscriber millennials and Gen Zs. To develop this value proposition, Comcast recently purchased Xumo, a premium AVOD service that features 160+ live channels and on-demand content. The service does include some traditional networks, but it is mostly positioned to appeal to Millennials and Gen Z users with a long tail of new lifestyle channels, such as
To help users navigate the full entrée of live channels and on-demand content choices, Xumo creates a personalized menu of choices via its data driven content recommendations across channels and on-demand content. This technology will certainly be leveraged into other Comcast services to improve intelligent recommendations.
NBC Universal has a long history of developing hand-crafted broadcast TV programming blocks of content. Drawing inspiration from its history, Peacock will also lead with human curated content playlists. But given that 73% of video on-demand users prefer personalization. Peacock will have to leverage Xumo’s data driven content recommendation system to “adapt” for each person’s individual needs at scale. However, for Peacock and Xumo to effectively adapt, they must be able to move to wherever users view content.
Reach & Access Content from Anywhere
Current viewership for broadcast and cable TV is shifting to Smart TVs. With over 40% of connected TVs that are purchased by Millennials and Gen Z, Xumo aggressively secured distribution deals with leading connected TV manufactures: Samsung, LG, Vizio, Panasonic, Philips, etc., to distribute their content to roughly 45 million homes in the US.
Comcast and NBC covet Xumo’s extensive connected TV reach because Roku, Android TV and Amazon Fire have overtaken smart TV’s operating systems. Comcast has long enjoyed being the commander (operating system) of users video needs via cable boxes, and understands the power of having direct distribution, because “the one that controls distribution, controls monetization.” Comcast and NBC will utilize Xumo’s wide reach to improve the visibility of Peacock throughout homes in the US — with hopes of potentially circumventing TV operating systems if unable to negotiate fair terms.
Variety of Content: Location, Hertiage, Connection
Xumo’s highway into US homes will also enable NBC Universal’s to bring along other cable and broadcast assets: NBC Sports Regional Networks, NBC Local News and Telemundo Stations, allowing NBC to further “double down” on their live content advantage. These networks and local stations have long served as video content that captures the fabric of a community and region, but this valuable content has been absent from the digital world. Although the major video on-demand services (i.e. Netflix, YouTube) feature a robust catalog of content, they lack content that reflects one’s geographical position and heritage. NBC wants to pair their regional and local assets with Xumo and Peacock’s national and global content to meet all levels (local, regional, and national/global) of a consumer’s TV content needs, to stand out from the video on-demand crowd.
Peacock now has a supporting cast to meet most of consumers’ TV content needs. Fortunately, the service has higher ambitions of creating an all-encompassing entertainment destination of news, sports, entertainment, and the most relaxing and intimate form of content, movies. For the past 20 years, consumers purchased movies from the comfort of their home via cable services. This was high margin revenue for cable providers, but as digital devices — smartphones, tablets, Smart TVs — infiltrated the home, consumers opted to order movies from services such as Amazon Prime Video, Apple iTunes and Google Play. These services not only enabled cross platform access to movie content, but also leveraged data from consumer’s habits across devices and software to provide them with intelligent movie recommendations of what they may like beyond just tentpole movies. In addition, big tech players have massive storefronts to solicit users to their movie services: Amazon Prime - 150M, iTunes - 800M, Google Play - 1B. The large installed base, intelligent recommendations, and cross platform access have allowed big tech players to secure the top 3 spots in transactional video on-demand (TVOD), with over 30% share.
Comcast acknowledged movie ordering shifting to digital platforms; opportunistically, in 2016, Comcast evolved their movie ticketing and information service, Fandango, into FandangoNow, a service where consumers can buy or rent movies across platforms. But over the past three years, Fandango has yet to develop a meaningful installed base — 14 million active users per month — to compete with big tech players. To increase their user base, FandangoNow purchased Vudu, a transactional and advertising video on-demand service with an install base of 100M households. Vudu, which was owned by Wal-Mart, was positioned as a service to compete with Amazon Prime. Wal Mart wanted to leverage users' shopping habits to serve intelligent movie recommendations and target shopping ads during movies, but they lacked the executional know-how. Some speculate that Walmart and Comcast aspire to combine forces to compete with Big Tech’s TVOD and AVOD offerings, their “hand was tipped” when the settlement amount was not disclosed. In exchange for Comcast paying less than full value for Vudu, Walmart will share some shopping habits data to help improve movie recommendations for FandangoNow (and Vudu) to drive movie buys and rentals; in exchange, Comcast will leverage their advertising expertise to give Wal-Mart preferred advertising inventory to target shoppers throughout their advertising platforms.
But most importantly, the Vudu acquisition allows Fandango to complete the movie window journey, to provide viewers with an opportunity to digest content in their most preferred window.
Peacock, along with Xumo, A&E, NBC Local News, NBC Sports, Telemundo, Vudu, and Fandango is hopes that these assets are enough to stake their claim to the premium advertising video on-demand territory, but also to become the leading video on-demand service across the entire video landscape.