Nearly 33 million Americans have “cut the cord” from their cable subscribers. Opportunities for streaming entertainment content are imposing tremendous pressures on traditional broadcast television gurus. NBCUniversal is among those feeling the pinch. But NBCUniversal television is not without hope. Armed with massive amounts of programming content, the chance to remain competitive is alive and well. The question is which strategies are likely to be effective and which ones won’t.
NBCUniversal Through the Years
NBCUniversal operates four divisions and 13 subsidiaries, but that was not always the case. As one of the original major television broadcasters, NBC had its beginning in the 1950s. But over the course of time, a need for expansion and diversification evolved. Ultimately, this led to several collaborations with Universal Television in the 1980s and 1990s. In 2004, the two officially merged as NBCUniversal.
Advances in technology, like satellite and broadband, led to the formation of NBCUniversal. But today, technology disruptors are much more profound.
Amidst the cost and confusion associated with cable television packages, many Americans are cutting the cord and turning to streaming. As a result, NBCUniversal Television audiences, and cable subscribers have declined. Facing fierce competition and a tornado of change, NBCUniversal is striving to find its way in a very dynamic industry.
Turbulent Times in the Entertainment Industry
For NBCUniversal, its role in the broadcast television industry is a fairly traditional one offering content through cable networks. But the industry is rapidly changing. Netflix now dominates the entertainment market with nearly 40 percent of consumers citing Netflix as having the best original programming. In fact, Netflix will spend roughly $8 billion on original content by year’s end. That’s impressive and not an area where NBCUniversal Television has been able to compete. NBCUniversal Television’s $75 million effort in this arena, Seeso, failed miserably.
The bigger issue for NBCUniversal, however, is Netflix’s new model of business. Unlike NBCUniversal Television’s approach, Netflix sells directly to consumers. Why is this important? Because that means easy access to consumer data. Unlike NBCUniversal, Netflix knows the content its audience likes, when they want to view it, and how they access it. As a result, the competition for NBCUniversal in knowing audiences and gaining their attention is tremendous. NBCUniversal must not only adapt to consumer trends, but they have to change their analytical processes as well.
Shifting Strategies and Leveraging Assets
In 2013, NBCUniversal was acquired by Comcast, the telecommunications giant that is guided by Bold Leader Brian L. Roberts. Since that time, Comcast has made moves to shift NBCUniversal Television strategies. Comcast’s initial attempts were to acquire 21st Century Fox entertainment content. However, this attempt failed as Disney made the deal with 21st Century Fox instead.
More recently, Comcast purchased Sky, the over-the-top streaming video service based in the UK. Presumably, the addition of Sky to the NBCUniversal portfolio will enable Comcast to better compete with Netflix in this area.
In regard to NBCUniversal, different strategies are also being pursued. Recently, NBCUniversal introduced “Watch Back”, a rewards marketing program to attract and retain customers. Likewise, NBCUniversal is restricting its advertising campaigns. Instead of multiple commercial interruptions, NBCUniversal television will reduce breaks by 20 percent and ad time by 10 percent. These approaches hope to allow NBCUniversal television to better compete with the minimal interruptions on streaming alternatives. Finally, NBCUniversal Television’s content will likely be leveraged across all of Comcast’s domains. This remains NBCUniversal’s most valuable asset.
The Future of Entertainment for NBCUniversal
Presently, Comcast continues to generate about $90 billion in revenues each quarter, with broadband Internet services being its anchor. But eventually, this won’t be enough to sustain a competitive advantage in the marketplace. Based on recent moves, Comcast seems to appreciate the challenges ahead for NBCUniversal specifically, and its entertainment brands generally. Just like antenna-based television, cable TV may eventually fade away. But through creative acquisitions, leveraging of assets, and shifts in services, Comcast looks to be adapting.
And what’s good for Comcast will certainly be good for NBCUniversal in the process.