Friday Mailing: NBCU, The Winter Olympics & First Party Data; A Follow-Up re: Blackstone & Candle Media
NBCU, The Winter Olympics & First Party Data
Two developments from this past week Comcast/NBCUniversal's Peacock are worth highlighting.
The first is the announcement that all Winter Olympics events will be available to watch on Peacock for paying subscribers, only.
The second is a quote from Linda Yaccarino, chairman, global advertising and partnerships, NBCUniversal, in a piece from AdWeek TV's Jason Lynch, Execs and Ad Sales Chiefs Reveal Their Top Priorities for 2022:
[Last] year, I [was] incredibly proud of the transformative partnerships we’ve built across every corner of our industry. And [this] year, as part of that, one of our top priorities is data. Our team is leading a companywide data initiative to create a unified system—from Fandango to parks to Peacock– in the most privacy-safe way possible. Harnessing this data will allow us to deliver strategic insights for our clients that no other media or tech company has—and it will only make our partnerships stronger.
When looked at through the lens of first party data, and the growing value of it to advertisers in the post-App Tracking Transparency world (ATT), the two are related. [1]
Meaning, if users hate the user experience on Peacock, especially during tentpoles like the Winter or Summer Olympics – and both Q3 subscriber numbers and all objective evidence suggests they did during the Tokyo Olympics– the data is going to tell that same story to advertisers, too.
But, one reason why the Tokyo Olympics were a messy mix of live broadcasts, streaming and on-demand coverage was because of the majority of the $1.76B in ad revenues were linear and not streaming.
Throw in the ratings coming in at record lows, the story for advertisers was that NBCU was failing to make its viewers happy. In turn, that resulted in underperforming ad buys.
So, it is no accident that we are hearing about both a focus on data and NBCU changing its Olympics distribution strategy to favor Peacock. It needs to show advertisers seeking better and higher quality first party data that it has a robust understanding of its consumers.
The Tokyo Summer Olympics and Peacock's shortcomings are not telling that story. [2]
For a good overview of just how important first party data will be to marketers and advertisers in 2022, check out eSeller's 2022 eCommerce Predictions – 26 eCommerce Experts Predict The Biggest Opportunities For Your Business.
A Follow-Up re: Blackstone & Candle Media (Members Only)
As coincidence would have it, yesterday The Information's Jessica Toonkel published Inside Blackstone’s Plans to Create an Entertainment Empire.
The piece confirmed, in detail and at length, my read that Blackstone's and Candle Media's bet is primarily on near-guaranteed growing production revenues from an increasingly inelastic demand for new content in streaming.
The article also shed light on Candle's e-commerce objectives:
Commerce, too, is a big buzzword in Candle Media’s vocabulary, as it is for other media businesses looking for novel sources of revenue. For example, the company is discussing ways to build a commerce business around Witherspoon’s popular book club. Selling stuffed animals drawn from London-based Moonbug characters is another possibility.
“We are a content incubation and packaging business and we are going to own some of it and we are going to spend some money on some of it and then we are going to create an e-commerce ecosystem around the content we own,” said [Joe Baratta, global head of private equity at Blackstone].
This confirmed my own conclusion in Wednesday's Three More Acquisitions from Blackstone's Candle Media (Kevin Mayer & Tom Staggs)
it would be not unreasonable to assume that the future of Candle Media is betting on the upside from increased production revenues, and whatever Staggs and Mayer can leverage from their Disney background to evolve and grow CocoMelon towards Disney's model.
However, it did not shed much light on Candle Media's bet on the creator economy. In that respect, the article was more speculative, relying on insights from Evan Shapiro, the former head of now-defunct NBCU comedy streaming app Seeso:
Focusing on high-end premium content makes sense given the demand for it, but Mayer and Staggs should focus more on newer, creator-economy projects that they can own, he said. “It feels a little old Hollywood to me,” Shapiro said of the company’s current focus.
I disagree with Evan here in the sense that this strategy is "old Hollywood": this is about near-guaranteed revenue streams from OTT that will only grow as content spend grows (the top eight US media groups plan to spend at least $115bn on new movies and television shows next year).
Private equity is focused more on the revenues and cash flow than the strategy, and banking on production houses with near inelastic demand from streamers is a smart strategy in 2022.
But, I agree that newer, creator-economy projects they can own are also a smart move: that is effectively their $3B investment in MoonBug.
As I have highlighted before, the challenges and risks lie in the Hollywood-meets-creator-economy models. I think those may be too risky for Blackstone, Mayer and Staggs.
Will Smith's recent GQ interview touched upon that dynamic:
Smith’s foray into social media also comes at a time when he and Jada have become Hollywood’s most transparent and vulnerable couple. Red Table Talk, the Facebook show hosted by Pinkett Smith, is the closest thing the digital age has to the role Oprah Winfrey and Dr. Phil once played on broadcast television—a place for difficult, messy conversations about love, sex, drugs, and everything else, often featuring their daughter, Willow, and Jada’s mother, Adrienne Banfield-Norris. Smith himself has appeared on the show, most notably for a frank discussion with Jada about a period of non-monogamy in their marriage. “The pursuit of truth is the only way to be happy in this lifetime,” Smith told me. “And we sort of came to the agreement that authenticity was the release from the shackles of fame and public scrutiny.” When you tell the truth, the pair reasoned, you never have to fear being found out.
Notably, Candle Media just spent around $60 million to buy an 11% stake in Westbrook, the media company owned by Smith and Pinkett Smith that produces Red Table Talk.
But, it did not purchase the company outright. We do not yet know the reasons for this decision, and it would not be unreasonable to assume that they minimize exposure to the risks of authenticity.
I wonder whether Blackstone and Candle Media are becoming less sold on the upside Hollywood-meets-creator-economy models: meaning, authenticity may be a tactic that drives scale in social media content, but not ROI.
Rather, the obvious opportunities for ROI are in e-commerce.
In other words, I think they are likely mulling the question I asked at the end of A Short Essay on Talent Trade-offs in Streaming vs. The Creator Economy:
What are the trade-offs for Hollywood talent to achieve Corinna Kopf-levels of success in the creator economy? Do they offer outsized returns when compared to “safer” but decreasing streaming dollars?
Corinna Kopf is the influencer who earned $4.2MM on OnlyFans from her 1MM+ Facebook followers and 6MM Instagram followers.
And, I think their answer in 2022 is, the trade-offs seem too steep (especially if a strategy requires an OnlyFans account for outsize returns) and the growth more theoretical than practical.
[1] I wrote about this issue of first party data last year in An Evolving Tension Between Data and Context in AVOD and AVOD after the 2021 Upfronts.
[2] Back in January 2020 I thought Peacock would fail because it was targeting too many customers to succeed.