Steve Burke, CEO, NBCUniversal, told CNBC “authentication” -- giving traditional pay TV subscribers access to digital content via an authenticated process -- has been too difficult and hard to promote.
This is among the main reasons that NBCU announced an effort to launch a new mostly ad-supported streaming service -- consisting of live programming (including CNBC), on-demand and library programming, as well as third-party content.
Burke says NBCU projects getting what amounts to $5 a month per user in advertising revenue. The potential here: NBCU reaches over 90 million U.S. households on pay TV services. In addition, sister company Comcast Cable and its new European TV broadcaster Sky plan to roll out the as-yet unnamed service free to its 52 million subscribers.
The service plans to run far fewer TV commercials -- three to five minutes per hour -- than traditional TV network ad loads, which can run around 15 minutes of non-programming advertising/promotional messaging.
The idea is to give TV customers more value -- and less inclination to cut the pay-TV cord. (NBCU will also offer a no-advertising OTT option for an as-yet undetermined fee.)
Why the change now? Because it’s even more of a disruptive TV world. NBC decided to go simple -- which is where over-the-air broadcast TV has been for decades. Just watch the advertising -- whether on pay TV, a digital antenna in an over-the-air TV home or the internet.
TV authentication was aimed to give existing pay TV providers more value, as long as they remained in the current traditional pay TV ecosystem.
But as we all know, with Netflix, Hulu (NBCU’s parent Comcast has a 30% equity share) and Amazon, modern TV consumers often view any friction-halting access as a no-value proposition.
The big question: Can Walt Disney, WarnerMedia and others catch up in the OTT space when it comes to easy access of ad-supported content?