Friday Mailing: A Quick Note On Comcast's Q2 2022, Peacock & The "Half Life" Old Library
A Quick Note On Comcast's Q2 2022
In Wednesday’s Member Mailing “Why Apple's & Amazon's Advantages In Sports Streaming Are Over-Hyped”, I wrote that ”it may be worth keeping a closer eye on Comcast” because of recent rumors it wants to buy a Smart TV platform.
Comcast CEO Brian Roberts addressed those rumors on its Q2 2022 earnings call in response to a question about his “level of confidence” that Comcast has growth opportunities “and the opportunity to create value”.
Roberts emphasized that the focus of the company is to “be able to return capital to shareholders” and so “our bar is therefore very high” to deploy capital to make any acquisitions. It reads like another way of saying that Comcast is certainly testing the waters, but management doesn’t yet have the case to make to shareholders for expanding its efforts in the Smart TV marketplace.
Notably, we only have various market signals as to what its intentions are here. A Twitter user in the UK highlighted for me one potential outcome: Comcast's Sky Glass Smart TV "seems like the first true attempt for Comcast to address that friction issue so going for TPV (who make the Glass tv) or Vizio actually makes real sense here now they have a single tech stack across Sky & XFinity.”
Comcast consolidating the technologies powering its Smart TV production makes sense in the U.K. for its Sky Glass product. But, to do so in the U.S. - where Comcast's Xfinity platform still seems to have a lot of competition in a market dominated by Roku, Amazon Fire TV, and Samsung (Conviva) - still invites reasonable questions.
Peacock & The "Half Life" Old Library
Another notable takeaway from Comcast's earnings call is that Peacock growth stayed flat at 27 million MAAs and 13 million paid subscribers in the U.S.
The bet seems to be that the numbers will grow when the next-day broadcast becomes exclusive after leaving Hulu in Fall 2022 (from a deal reached with Hulu back in March). There is also some bullishness around hit summer movies like “Jurassic World: Dominion” and “The Black Phone” having their Pay One window releases on Peacock soon, too. They also told investors they are betting sports will drive sign-ups, including Sunday Night Football, Premier League, and the World Cup.
We rarely hear much about one of their most expensive bets, a $500MM investment to take “The Office” away from Netflix in 2020. Peacock shares its data with Nielsen, but none of its TV originals seem to have “hit” yet. Notably, “The Office” has gone from Nielsen’s most streamed show in the U.S. in 2020 (57.1MM minutes stream) to no appearances on that list in the year-and-a-half since moving to Peacock in 2021.
An obvious part of that problem is scale: 13MM paid users is less than 20% of Netflix’s market reach. Another part of the problem may be the value proposition of Peacock, which offers “super fan” episodes of The Office in its free tier but does not target “The Office” algorithmically to users like Netflix’s homepage recommendation engine does.
In turn, Peacock’s software simply may not be good enough to drive scale for any content on the app. Moreover, audiences may not be actively seeking “The Office” and therefore would not
The Problem of Old Library
I also wonder whether the dip in consumption of “The Office” reflects something highlighted by a recent USA Today article arguing, “Despite the multitude of classic TV shows available on major streaming services like Netflix, Amazon, Hulu, HBO Max, Disney+, Paramount+ and Peacock, many series aren’t possible to stream at all.”
The argument is focused on “seminal series titles “that TV audiences from the late 20th century remember well, like “Laverne & Shirley,” “Mork and Mindy,” “WKRP in Cincinnati” and “Homicide: Life on the Street” that are not any major paid or free subscription service nor are available to purchase digitally.
But then the writer, Kelly Lawler, makes a point that reflects the challenges faced by “The Office”: “Just as our cultural memory grows longer, thanks to newfound accessibility, series left out will fade further from the view of new generations who consume their art by algorithm.”
Her point is that old content and even newer classic TV content like “The Office” ultimately *need* algorithms to be discovered. Otherwise, they are effectively forgotten by generations old and new.
An Accelerated “Half-Life” of Content?
There's a point about value Lawler is implicitly making and which I have been thinking about lately: If there is such a thing as “half-life” to older TV content - a period of time where the value of content declines as audience behaviors shift across generations, demographics, devices, and platforms - I think that the streaming era has accelerated the ‘half-life” of library content that legacy media believes is valuable.
I think this article does a good job of highlighting the challenges of older TV titles like “Laverne & Shirley”: the implication is that they don’t seem to have value to legacy services like Peacock, to demographically and/or genre-focused services like Starz, or algorithmically-driven services like Netflix. So those titles may be well past their "half-life" (tragically).
But “The Office” is a recent hit, and its cast members have since found success on Cameo (actor Brian Baumgartner earned more than $1MM in 2020) and on podcasts (“Office Ladies”). Despite all this “earned media” for the show, “The Office” is no longer in Nielsen ratings as the most-streamed TV show in the U.S.
Obviously, part of that falls on Peacock’s execution, to date. But one also has to wonder whether recent trends with both Netflix IP in Nielsen Top 10 and its own Top 10s, and the disappearance of older IP in Nielsen streaming Top 10s suggest something else is going on here. For instance, Netflix’s $500MM investment in “Seinfeld” saw the series show up in Nielsen Top 10s as recently as Q4 2021, but the show has since disappeared.
Netflix’s recent seasons of “Stranger Things” and “Bridgerton” have topped the charts and then quickly disappeared. There’s an evident half-life to Netflix’s content. But it is legacy media library titles that face the harder questions here, especially when both Netflix and NBCUniversal are sinking $500MM, each, into relatively recent titles and both stop appearing in Top 10 lists.
Difficult Questions Loom
One answer could be that legacy content *needs* the algorithm to thrive with newer audiences, and “The Office” has proven that across Peacock and Netflix (“Gilmore Girls”, which ran from 2000 to 2007, is on Netflix and is now in Nielsen’s Top 10).
But I think some difficult questions loom for legacy media streaming services: are older library titles still valuable without an algorithm? And, if there is an algorithm, which titles in the library are still valuable? Which ones are past their half-life?
Nobody wants to admit their IP has less value than before their streaming service launched. But in the face of a flood of new content - including from 2MM+ creators in YouTube’s Partner Program and 39,000 TikTok accounts with over 1 million followers - the value of older libraries increasingly seems to be drowned out by the present.