Comcast is considering removing NBCUniversal films from streaming platforms like Netflix and maintaining upcoming releases for its own Peacock service, according to a new report by Bloomberg. The report comes at a time when competitors like WarnerMedia and Disney are using their streaming services to offer subscribers exclusive access to highly anticipated new films.
For subscribers like you and me, that means movies like F9 can be streamed exclusively on Peacock instead of going to HBO Max. Currently, Universal has a production deal with HBO Max that gives the streamer “rights to show new Universal Pictures films about nine months after they left theaters, “according to Bloomberg. Illumination (the studio behind Despicable Me and Minions) has a similar deal with Netflix. Both transactions are set to expire at the end of 2021.
Losing access to movies like The Secret Life of Pets can also impact Netflix’s business, but executives have publicly stated several times that they have prepared themselves for competitors to withdraw their films as competition in the streaming landscape heats up. WarnerMedia would like to keep the Fast and Furious franchise on HBO Max also in some capacity. For NBCUniversal, the big question is whether or not executives think that having these exclusive movies on their Peacock streaming service will lead to a sufficient number of customers signing up, so losing those licensing deals is worth the risk.
It is a gamble that several entertainment industry conglomerates are trying to discover. ViacomCBS, the owner of Paramount and Paramount +, has specifically signed a new deal with the premium cable network Epix, which allows more control over where the studio’s films end up after leaving theaters. ViacomCBS may take films such as A Quiet Place II and Mission Impossible 7 to Paramount Plus before they are available on Epix as part of the new deal. Much like the internal thinking reported by Comcast and NBCUniversal executives, the idea is that having great movies available exclusively and quickly on Paramount + will encourage more people to subscribe
Peacock had just over 33 million entries in Comcast’s fourth-quarter earnings report in January. There are, however, more questions than answers around that number. Executives at Comcast and NBCUniversal have not specified how many users are paying for the $ 10 per month premium package, or are broadcasting Peacock for free as part of their cable and internet packages, for example. If Peacock is growing at an impressive rate (something we cannot know without hard numbers), then using a strategy similar to ViacomCBS could help to increase Peacock’s customer base exponentially. At the same time, if Peacock is not growing as fast as company executives wanted and if a new Minions or Jurassic World movie fails to attract as many customers as NBCUniversal executives expected, the best move is to license.
All of these considerations come under the belief that having great headlines will lead to more customers, but acquiring subscribers is one thing – retaining them is another. See WarnerMedia. When the company decided to change its 2021 movie list to a hybrid model (for example, customers can watch Godzilla vs. Kong in theaters or on HBO Max in the United States), it assumed that there would be a big new movie every month there will be more registrations.
The first test was Wonder Woman 1984. WarnerMedia did not provide any specific numbers, but between the third and fourth quarters of 2020, HBO Max doubled the number of activations (customers activating their HBO Max accounts) and tripled the number of retail subscribers (customers who searched for and paid for HBO Max without being bundled into anything). Although the hybrid model is immediately worse for a film’s overall revenue, WarnerMedia’s bet is on the long-term growth of HBO Max. If Wonder Woman 1984 gets millions of subscribers at the door, and HBO, Adult Swim, Studio Ghibli or Friends is what keeps them subscribed month after month, the bet is more likely to be worth it.
Streaming is centered on recurring revenue, not just a big reward that comes with a big box office or a new licensing agreement similar to what NBCUniversal and Comcast have with Netflix and HBO. What this means for us, customers who just want to watch movies and TV shows as easily as possible, is that watching new movies may require subscribing to even more streaming services than ever before. There is a chance that NBCUniversal and Comcast will decide that it makes more sense to license the films from the studios instead of trying to dump everything on Peacock. The Bloomberg report suggests that executives are open to renewing deals, and NBCUniversal has not devoted notably the same budget for Peacock content that other competitors have for their own streaming services.
The other side is also true. If Peacock wants to compete with the Netflixes and Disney + s in the world, NBCUniversal and Comcast will likely need to increase their exclusive offerings.