Portland, OR, USA – Jun 9, 2023: A collection of popular streaming apps.
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Not long ago, every major media company seemed determined to build its own direct-to-consumer streaming app. The pitch was simple: bypass the cable gatekeepers, control the customer relationship and keep distribution firmly in-house. Why rely on partners when you could go straight to viewers?
What did NBCU and YouTube agree to do here?
That era now looks far less definitive. NBCUniversal’s new partnership with YouTube around Peacock suggests that direct-to-consumer streaming is not the endgame so much as one piece of a much older media strategy: syndication. No platform exists entirely on its own, and that is especially true for streaming services created by legacy entertainment companies.
NBCU and YouTube, of course, are hardly strangers. YouTube already hosts a deep catalog of NBCUniversal programming and clips, including NBC News, “Saturday Night Live,” classic NBC entertainment tied to figures such as Johnny Carson and David Letterman, and content connected to Peacock itself. Even so, this latest deal feels more significant. It reads as a clear recognition by NBCU that YouTube, YouTube Premium and the broader Big Tech ecosystem have become essential gateways for how audiences discover and consume media.
Under the agreement, Peacock Premium, NBCU’s ad-supported subscription tier, will be offered to YouTube Premium subscribers as part of a bundled package beginning in 2027. The scale difference is hard to ignore: YouTube Premium and YouTube Music together count more than 125 million subscribers worldwide, while Peacock has 48 million, less than half that total. Internationally, NBCU’s Universal+ and Hayu will also be made available within YouTube Premium.
The companies are unlikely to disclose the finer points of the financial structure, including how subscriber fees, advertising revenue, marketing support and promotional costs will be divided. But NBCU Media Group Chairman Matt Strauss made the strategic goal plain, saying the arrangement is designed to “accelerate [Peacock’s] next phase of growth by bringing [Peacock] to millions of YouTube Premium subscribers.” For YouTube, the upside is equally obvious: more premium video content, delivered in a way that keeps users engaged within its own ecosystem.
Big Tech power only grows
The logic is compelling. Peacock has recently reached profitability, but it remains far behind the distribution power of Netflix, which has more than 300 million subscribers, and Amazon Prime Video, which is estimated at 180 million to 200 million subscribers, not to mention YouTube’s vast global reach. Still, placing Peacock inside YouTube Premium is a long way from the original promise that legacy media companies could offset collapsing cable subscription revenue simply by launching their own streaming apps. Digital subscription fees and streaming ad sales may help, but they do not come close to fully replacing the economics of the traditional linear TV bundle.
The Peacock deal is yet another concession to the necessity of being anywhere and everywhere that consumers are consuming. We already have NBCU and other major media company apps available through aggregators such as Amazon Channels, Apple TV, and Roku, but now we’ve got access to Peacock without even signing up through Peacock or YouTube – it’s automatically a part of your YouTube Premium service.
For DTC, echoes of the ghosts of media past are abundant here. How many people and how much revenue is driven by websites like NBC.com? Anyone remember TV Everywhere? If you do, you probably don’t want to admit it. In the early days of streaming, every media company from NBCU to Disney to Fox to the Turner networks created a standalone app that pay-tv subscribers (to cable, satellite or telco bundles) could access for free. But the apps required a clunky online authentication process and most importantly contained only the content from that one media company.
Once Netflix came along with a plethora of easily accessible content from dozens and then hundreds and thousands of different content suppliers, the TV Everywhere experiment more or less ended in ignominy. The lesson here – and one the NBCU-Peacock-YouTube deal concedes – is that a media company just isn’t the mountain that Mohammed goes to – the consumers are the mountain. You’re going to have to go stalking your consumers wherever they want to be.
Anybody remember syndication? Sound familiar?
On the other end of the spectrum, content syndication has a long tradition at the center of every stage of the electronic media business. Broadcast radio and TV networks were simply an aggregation of independently owned local stations who became network affiliates and who were paid to distribute content from the national networks (OK, financial models have changed a bit). As the broadcast TV business grew, Sony Pictures Television, distributor of Seinfeld as well as former King World properties Wheel of Fortune and Jeopardy!; 20th Television (then part of Fox) with The Simpsons and Family Guy, and Warner Bros. TV with Friends, all became examples of hugely successful syndication businesses.
For the producers of TV content or their syndication partners, it didn’t matter if a show Wheel of Fortune was on an ABC network affiliate in one market and a CBS affiliate in another – those syndicators had the best product on the market, and they could usually aim for the number one local station in every market. It was fishing in the ponds where consumers proliferated. Today’s platforms, technologies and revenue shares are vastly different but the need for affiliates to distribute your content to as broad an audience as possible hasn’t changed.
The TV equivalent of MAGA might be the hope that we can again have a system where you can one-stop shop for all the content you need. It was oh-so-much easier than signing up for groups of apps and trudging through the forest of algorithmic recommendations to find shows you actually want to watch. But we aren’t going back there, AI or no AI. Consumers have a plethora of choices and the option to select the platforms and content that they want – and not to take what they don’t want.
If you own, distribute and monetize content, you’re going to have to partner up wherever and however you can to get to the audiences who will want to watch what you’re making. They aren’t coming to you folks – go find them. Direct to consumer isn’t dead – but it isn’t an independent pathway – just one of many that you’ll have to traverse in the content forest.
