NBC-U teases with SVoD launch, is Comcast giving up on Hulu?

Comcast reportedly has the makings of its own subscription video service in the works behind closed doors, which is set to launch in the next 12 to 18 months and will be centered around programming from NBCUniversal. Our initial thoughts here are what is NBC-U going to do with an SVoD service, considering that Comcast is a co-owner of third-placed US SVoD service Hulu?

NBC-U is currently a key partner for Hulu, so the new service suggests it would have to either adjust its content distribution dealings with Hulu to show older episodes of NBC content, or completely sever the tie, in order to avoid a clash of interests. Faultline Online Reporter has always said that Hulu’s existence runs against the eventual internet interests of all of its owners.

As NBC-U’s ratings have shot up, Comcast will want to keep revenues generated from NBC-U hit shows for itself, rather than sharing them with Hulu co-owners 21st Century Fox, Disney and Time Warner.

The industry knows only too well that it is easier said than done to replicate the success of Netflix, Amazon and Hulu in the SVoD market – but NBC-U could reap huge rewards should it get the service spot on, while Comcast must tread carefully not to offer discriminatory pricing of NBC-U  content to competing services.

The service, as reported by unnamed sources close to Bloomberg, is expected to include content from NBC Broadcast Network, plus NBC-U ’s cable networks USA, Bravo and Syfy.

This fresh spate of rumors are the second surrounding the launch of a major premium content service in the US in the space of the week. Reports emerged last week that Apple is prepping its own premium subscription service, so how could the two line up against each other, if they ever come to fruition?

Pointing out the obvious first of all, is that the country’s largest cable operator and the country’s most valuable technology firm will both be noticeably late to the party. This triviality will be of little concern for either – with the cash, the assets, and the existing user bases firmly in place to push new offerings out and see a healthy uptake, although neither is destined to be a Netflix killer.

The two also have different route to market strategies – NBC-U has a large back catalog of content from its various networks, as well as the scope to potentially add live streaming to its subscription service in the future, as All Access does, having recently signed a contract with Fox Sports to live stream in-market NFL games. Meanwhile, Apple’s plans will reportedly involve deals for premium content from HBO, Starz and Showtime.

Last year, NBC Entertainment chairman Bob Greenblatt teased that NBC-U was developing a rival to CBS All Access, who stated at the time that “we want to do something that is not an affront to the cable business or distributors. We’re trying to craft something that is a good thing for them as well.”

This suggests that All Access is the real rival for NBC-U ’s SVoD service, which has amassed some 1 million subscribers since it launched in October 2014, and All Access also boasts a multi-year deal to live stream NFL matches, although this does not include the rights to show NFL matches on mobile devices, which are held exclusively by Verizon.

Comcast-NBC-U would therefore have to position the service at a similarly competitive price to All Access – $5.99 a month for live and on-demand content with advertisements, or $9.99 a month without ads.

Sources also claim that Comcast and NBC-U have already struck deals with cable networks to distribute a number of channels on the new streaming service, but even with these distribution deals, the launch of an SVoD service will still overlaps with Comcast’s cable TV subscriber base.

The lengthy 12 to 18 month wait for the rumored service is down to the regulations put in place regarding Comcast’s takeover of NBC-U, which inhibit it from launching any standalone service centered around its own content until September next year.

Once this expires, Comcast could begin taking advantageous control of NBC assets. Currently, Comcast has promised to ensure reasonable access to Comcast-NBC-U programming for multichannel distribution and has accepted an arbitration process for resolving disputes about prices and terms, as well as agreeing to provide the content to online video distribution services at fair market value and non-discriminatory pricing.

NBC-Universal’s current OTT subscription offering is the comedy service SeeSo, which costs $3.99 a month for VoD programming and live streaming, as well as an international SVoD service called Hayu, showing reality TV shows.