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NBC, AMC take opposite approaches with new subscription services

Content owners NBCUniversal and AMC continue to respond to shifts in viewer behavior with two new and telling Internet-delivered subscription services. But their approaches to these shifts represent two very different understandings of the future of TV. NBC is diving headfirst into niche subscription sports channels, while AMC is offering an ad-free version of its linear TV channel to stream.

AMC has already launched two niche OTT services: the horror movie service Shudder and the indie movie service Sundance Now. But AMC CEO Josh Sapan has been reluctant to take the flagship AMC channel outside the pay TV ecosystem.

Responding to consumers’ sudden and vocal aversion to advertising – and desperate to compete with the likes of Netflix and Amazon Prime for eyeballs – AMC has launched an ad-free version of its linear pay TV channel. The service, called AMC Premiere, is somewhere between Hulu and HBO Now: it costs $4.99 per month and offers fans instant access to new episodes of its shows as soon as they broadcast on its traditional linear TV channel, but without the ads. AMC will curate on-demand movie offerings for the service, and could in the future include original programming exclusive to the service.

If AMC’s ad-free experiment is a success, the model could easily be adopted by other pay TV networks which are struggling to balance on-demand viewing with ad revenue. But it’s unclear if paying more to remove ads will be enough to entice consumers to continue paying for pay TV. And in an era of pay TV that’s being defined by massive cord cutting, it seems unlikely that any significant number of pay TV subscribers will be willing to pay even more money per month to help improve the viewing experience of linear TV. On the other hand, it could be that some key customers are crying out for ad free content, as evidenced by the success of Netflix and Amazon – as long as the content is of high enough quality.

Most importantly, the service is not available nationally. Instead, AMC is rolling out the service on a pay TV provider basis, with the first customer being Comcast. AMC said it hopes to expand its ad-free streaming tier to more pay TV providers in the future, but it hasn’t (yet) voiced any interest in making the service available to cord cutters or cord nevers, as HBO, Showtime and Starz have all done. Instead of moving beyond the pay TV package, AMC seems to be doubling-down on it.

A subscription-based direct-to-consumer service would be a challenge for AMC to replicate. While AMC has built up an impressive reputation for original programming, all of its big hits, including Mad Men, The Walking Dead and Breaking Bad, have concluded, and the network has yet to produce another set of hits to compete with the likes of Amazon, Netflix, Hulu, Showtime or HBO.
NBCU, on the other hand, has seen the future of sports programming and distribution, and seems to understand that it’ll be delivered over the top to fans via a la carte subscription services. NBCU has been building up a suite of niche subscription streaming sports services as part of its NBC Sports Gold offering. NBCU is already offering several niche sports services, including the $40 Cycling Pass, $50 Pro Motorcross Pass, $60 Rugby Pass and the $70 Track and Field Pass.

Last week, the company launched a $50 Premier League Pass OTT service that’ll stream 130 live soccer games during the 2017-2018 season. The Premier League Pass squarely targets the type of niche soccer fans that don’t already have pay TV, as only three of the 130 matches will be exclusive to the OTT service. NBC Sports Group will broadcast some 250 Premier League matches during the season across various channels and digital properties.

NBCU has hit on a winner with this approach to sports. The a la carte season pass model allows NBCU to market its sports programming directly to the viewers who would be most interested in watch it, and in doing so will ensure it gets the most revenue bang for its buck – assuming the streaming experience is quality enough for superfans. This same model is being pursued by both sports leagues themselves in direct-to-consumer offerings, and by niche linear TV networks like The Tennis Channel.

NBCU also recently announced the launch of its linear Olympic Channel, which will be available to some 35 million US homes later this month via pay TV providers and Internet TV providers like FuboTV, Hulu, PlayStation Vue and DirecTV Now – just in time for the upcoming 2018 Winter Pyeongchang Olympics. But given NBCU’s new affinity for niche OTT services, we wouldn’t be surprised to see NBCU, which owns rights to all Olympics through 2032, launch a subscription OTT service to house all of its Olympics coverage, too.

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